Chain data show that Ethereum transaction costs have dropped to the lowest level of the years recently. Here is what it could mean for the price of ETH.
Ethereum average costs are now valued at only $ 0.168
In a new article on Insight, the Santiment Channel Analysis Society discussed the latest trend in Ethereum average costs. The “average costs” are a metric which, as its name suggests, maintains the average amount of costs that sender on the ETH network attach with their transactions.
The value of this indicator is directly correlated with the quantity of traffic with which the blockchain treats. The reason behind this lies in the fact that the network has only a limited capacity to manage transfers.
When the chain is occupied, transfers can be stuck while waiting for transactions to them have erased. Those who want their transactions to be treated as soon as possible can choose to attach higher costs than the average, so that validators deprive them.
During particularly high traffic periods, this type of competition between users can quickly generate average costs at significant levels. However, when there is little activity, sender is little encouraged to pay a significant amount of costs, so that the value of the metric can remain low.
It would seem that Ethereum witnessed this last type of conditions recently, because the average costs recorded a drop.
Looks like the value of the metric has declined to a low level in recent days | Source: Santiment
As displayed in the above graph, Ethereum average costs are made at a minimum of $ 0.168, which is the lowest since 2020. This means that activity on the network is historically low at the moment.
According to the analytical company, it may not be so bad from a commercial perspective, because the periods of low prices can often prevent rebounds of the price of cryptocurrency.
You will find below a table which shows an example of this trend in action:
The past trend in the transaction fees of ETH | Source: Santiment
As it is visible in the graph above, the average costs Ethereum falling under the bar of $ 1 in 2023 led to a bullish momentum for the assets. The explanation behind this model can reside in the fact that low end periods may indicate the disinterest of the crowd.
Historically, ETH and other digital assets have tended to evolve in a way that goes contrary to the expectation of the majority. This means that a lack of optimism can lead to rebounds, while excessive media threw can cause heights. From the table, it is obvious that the summit of the first trimester of ETH came while the metric exceeded $ 15, indicating a plethora of excitement.
“Generally, the costs of costs of less than $ 1 are a fairly promising sign that the crowd has become disinterested,” notes the analysis company. “Remember that there is no” lower “or” higher “level guaranteed by a set whenever the costs cost below or higher than a certain level.”
Ethn price
At the time of writing the editorial staff, Ethereum is negotiated about $ 1,600, up more than 1% in the last 24 hours.
Looks like the price of the asset hasn't moved much recently | Source: ETHUSDT on TradingView
Dall-e star image, Santiment.net, TradingView.com graphic
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