Ethereum

2024

<h2 id="key-points">Key Points</h2> 
<ul> 
 <li>Ethereum’s gas fees have drastically decreased, reaching a five-year low.</li> 
 <li>The total supply of ETH has been gradually increasing over the past few months.</li> 
</ul> 
<p> Ethereum, which was once known for its high transaction costs, has seen a significant drop in gas fees.<br> This decrease has made the network more affordable and accessible to users, but it has also raised concerns about the potential impact on the value of ETH.</p> 
<h2 id="ethereum-gas-fees-reach-historic-lows">Ethereum Gas Fees Reach Historic Lows</h2> 
<p>A report from Kaiko, released on August 19, disclosed that Ethereum’s gas fees have fallen to the lowest they have been in five years.<br> This decrease is due to the increased activity on Layer 2 solutions and the effects of the Dencun upgrade in March 2024.</p> 
<p>The Dencun upgrade significantly lowered transaction fees on Layer 2 networks, contributing to the overall drop in gas fees.<br> According to Dune Analytics, Ethereum’s gas fees last spiked significantly in March 2024, reaching over $603.2 million.</p> 
<p>Since then, they have been steadily decreasing, with July 2024 recording fees of around $93.4 million.<br> Kaiko’s research indicates that the current month is set to record the lowest fees.</p> 
<h2 id="increasing-supply-of-eth">Increasing Supply of ETH</h2> 
<p>One of the effects of lower gas fees is a decrease in the quantity of ETH being burned.<br> Under Ethereum’s EIP-1559 mechanism, a portion of gas fees is burned, effectively reducing the supply of ETH.<br> With lower fees, less ETH is being burned, which could potentially lead to an increase in the token’s supply over time.</p> 
<p>The decrease in Ethereum gas fees, largely due to the Dencun upgrade and increased Layer 2 activity, has resulted in a decrease in the amount of ETH burned through transaction fees.<br> As a result, the total supply of ETH has slowly increased from 120 million in March 2024 to over 120.2 million currently.</p> 
<p>This trend has been slow but steady, as shown by data from Glassnode.<br> Kaiko’s report noted that this growing supply of ETH could potentially dampen price increases in the short term, even with positive demand drivers such as spot ETH ETFs.<br> The increase in supply, without a corresponding increase in demand, could put downward pressure on ETH prices.</p> 
<p>Despite a slight increase of less than 1%, Ethereum is trading at around $2,648 at the time of writing.<br> Ethereum has struggled to approach or test the $3,000 resistance level, with its short-moving average (yellow line) acting as a formidable barrier.<br> Moreover, the Relative Strength Index (RSI) for Ethereum was around 40 at press time, indicating a strong bearish market trend.</p>

Lowest Ethereum Gas Fees in Five Years: What Does It Mean for ETH?

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CoinEagle.com

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