Ethereum gas fees have declined, suggesting a potential altcoin rally as transaction fees follow investor sentiment trends, according to Santiment.
Gas fees on the Ethereum network have fallen to a six-month low. The average cost per transaction is now $1.12, the lowest since October 18.Analysts from Santiment suggest this reduction in gas fees could be the start of an impending altcoin rally.
Ethereum Gas Fees Drop Sharply
Santiment notes that traders tend to oscillate between bouts of extreme optimism, where they expect significant asset growth, and bouts of pessimism, where they foresee a decline.
These changes in outlook are mirrored in transaction fees, which tend to spike around market highs and revert to typical levels during market lows.
The recent decline in Ethereum gas fees can be attributed to the Dencun upgrade and a general slowdown in the wider crypto market. These factors have reduced on-chain activity, leading to lower Ethereum gas fees.
This situation is a stark contrast to just a few months ago, when gas fees on the Ethereum network reached an eight-month high in February. This spike was linked to a surge in interest surrounding an experimental token standard called ERC-404.
On February 9, gas prices peaked at an average of 70 gwei per transaction, equivalent to approximately $60 for a standard transaction. At their highest, gas costs rose to 377 gwei, a level last seen on May 12, 2023.
Ethereum has recently experienced a modest rally, gaining 4.3% over the past week according to data from CoinGecko. However, as of today, ETH has seen a 4% decline, wiping out last week’s gains and trading around $3,200.
Ethereum’s Circulating Supply Expands Rapidly
Meanwhile, reduced activity on the Ethereum network has contributed to a rise in the circulating supply of ETH, which has reached its highest level in the past month.Over the last 30 days, data reveals that 74,458 new ETH were issued, while 57,516 were burned, resulting in a net supply increase of 16,979 new tokens.
This is a departure from the previous five months, which saw consistent deflationary trends.Despite this recent uptick in ETH inflation, the network has burned over 437,000 tokens since transitioning to a proof-of-stake consensus mechanism in September 2022.
In other news, asset manager Franklin Templeton gained attention by listing its spot Ethereum exchange-traded fund (ETF) on the Depository Trust and Clearing Corporation (DTCC) website.This move has renewed investors’ optimism about the potential approval of an Ethereum ETF by the SEC, with a decision expected in May.
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