Ethereum

2024

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Time

<ul>
 <li aria-level="1">Ethereum gas fees reach a five-year low due to Dencun upgrade and increased Layer 2 network activity.</li>
 <li aria-level="1">Lower transaction costs enhance user accessibility but slow the Ethereum token burning rate under EIP-1559.</li>
</ul>
Ethereum has seen its transaction fees, or gas fees, drop to a five-year low as of August 2024, reflecting increased efficiencies introduced by recent technological upgrades. 
<figure id="attachment_88024" aria-describedby="caption-attachment-88024" style="width: 100%" class="wp-caption aligncenter"><img decoding="async" class="size-full wp-image-88024" src="https://www.ethnews.com/wp-content/uploads/2024/08/chart_snapshot.png" alt="chart_snapshot" width="1280" height="640">
 <figcaption id="caption-attachment-88024" class="wp-caption-text">
 Source: Ethereum Gas Price Chart by livdir
 </figcaption>
</figure>
This decline in fees, while beneficial for user accessibility and cost, brings with it broader economic implications for the cryptocurrency’s cryptomarket.
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">
 Current <a href="https://twitter.com/hashtag/Ethereum?src=hash&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">#Ethereum</a> (<a href="https://twitter.com/hashtag/ETH?src=hash&amp;ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">#ETH</a>) safe low gas price: 0.829915657 Gwei Fee chart(7d): <a href="https://t.co/OXRNccqoOB" rel="noopener noreferrer nofollow">https://t.co/OXRNccqoOB</a> 24h: <a href="https://t.co/TzgtKlxgyb" rel="noopener noreferrer nofollow">pic.twitter.com/TzgtKlxgyb</a>
 — Ethereum Gas Price Chart<img src="https://s.w.org/images/core/emoji/15.0.3/72x72/1f514.png" alt="🔔" class="wp-smiley" style="height: 1em; max-height: 1em;"> (@ETHgasChart) <a href="https://twitter.com/ETHgasChart/status/1826032185343881509?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">August 20, 2024</a>
</blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
The primary driver behind the reduced gas fees is the implementation of the Dencun upgrade in March 2024, which enhanced the capabilities of Layer 2 networks, thereby alleviating the burden on Ethereum’s main network.&nbsp;
<figure id="attachment_88028" aria-describedby="caption-attachment-88028" style="width: 100%" class="wp-caption aligncenter"><img decoding="async" class="size-full wp-image-88028" src="https://www.ethnews.com/wp-content/uploads/2024/08/layer-2-ethereum.jpeg" alt="layer-2-ethereum" width="680" height="312">
 <figcaption id="caption-attachment-88028" class="wp-caption-text">
 Source: Grow the Pie
 </figcaption>
</figure>
As <a href="https://www.ethnews.com/could-this-be-the-best-time-to-transact-on-ethereum-gas-fees-say-yes/" rel="noopener noreferrer nofollow">reported in ETHNews</a>, this technological enhancement not only lowered fees but also shifted much of the transactional load to these secondary layers.
An unintended consequence of these lower fees is a decrease in the rate of Ethereum tokens being burned. Ethereum’s EIP-1559 mechanism automatically burns a part of the transaction fees, which reduces the overall supply of Ethereum tokens in circulation.&nbsp;
<figure id="attachment_88032" aria-describedby="caption-attachment-88032" style="width: 100%" class="wp-caption aligncenter"><img decoding="async" class="size-full wp-image-88032" src="https://www.ethnews.com/wp-content/uploads/2024/08/EIP-1559-1143x640-1.webp" alt="EIP-1559-Ethereum" width="1143" height="640">
 <figcaption id="caption-attachment-88032" class="wp-caption-text">
 Source: cryptodefinance
 </figcaption>
</figure>
With the decrease in gas fees, the burning rate has slowed, leading to a less rapid decrease in the total token supply. From March to August 2024, Ethereum’s supply saw a marginal increase from 120 million to 120.2 million tokens.

<div class="cryptoboxes" id="mcw-12523" data-realtime="on">
 <div class="mcw-chart mcw-chart-light" data-font="inherit" data-chartcoin="ETH" data-chartcurrency="USD" data-chartrate="1.000268" data-charttype="chart" data-chartview="day" data-charttheme="light" data-chartsmooth="true" data-chartareacolor="" data-chartbgcolor=""></div>
</div>
While an increase in token supply could potentially enhance liquidity and encourage broader use of Ethereum, it may also exert downward pressure on its price.
<figure id="attachment_88036" aria-describedby="caption-attachment-88036" style="width: 100%" class="wp-caption aligncenter"><img decoding="async" class="size-full wp-image-88036" src="https://www.ethnews.com/wp-content/uploads/2024/08/ETHUSDT_2024-08-20_21-19-42.png" alt="ETHUSDT_2024-08-20_21-19-42" width="1384" height="857">
 <figcaption id="caption-attachment-88036" class="wp-caption-text">
 Source: Tradingview
 </figcaption>
</figure>
Market <a href="https://www.ethnews.com/will-ethereum-plummet-to-1651-what-you-need-to-know/" rel="noopener noreferrer nofollow">analysis by ETHNews</a> reveals that Ethereum has struggled to surpass the $3,000 mark, a key psychological and technical resistance level.
<figure id="attachment_88040" aria-describedby="caption-attachment-88040" style="width: 100%" class="wp-caption aligncenter"><img decoding="async" class="size-full wp-image-88040" src="https://www.ethnews.com/wp-content/uploads/2024/08/ETHUSDT_2024-08-20_21-21-46.png" alt="ETHUSDT_2024-08-20_21-21-46" width="1384" height="857">
 <figcaption id="caption-attachment-88040" class="wp-caption-text">
 Source: Tradingview
 </figcaption>
</figure>
For the first time ever, the ETH balance on exchanges has dropped below 10%.
<figure id="attachment_88044" aria-describedby="caption-attachment-88044" style="width: 100%" class="wp-caption aligncenter"><img decoding="async" class="size-full wp-image-88044" src="https://www.ethnews.com/wp-content/uploads/2024/08/difference-in-the-balance-of-Ethereum-vs.-Bitcoin-on-exchanges.jpg" alt="difference in the balance of #Ethereum vs. #Bitcoin on exchanges" width="1200" height="672">
 <figcaption id="caption-attachment-88044" class="wp-caption-text">
 Source: glassnode
 </figcaption>
</figure>
This struggle is evident in the cryptocurrency’s price movements and is underscored by market sentiment indicators such as the Relative Strength Index (RSI), which, at around 40, indicates a bearish trend.
<figure id="attachment_88048" aria-describedby="caption-attachment-88048" style="width: 100%" class="wp-caption aligncenter"><img decoding="async" class="size-full wp-image-88048" src="https://www.ethnews.com/wp-content/uploads/2024/08/ETHUSDT_2024-08-20_21-24-30.png" alt="ETHUSDT_2024-08-20_21-24-30" width="1737" height="744">
 <figcaption id="caption-attachment-88048" class="wp-caption-text">
 Source: tradingview
 </figcaption>
</figure>
This nuanced scenario presents a complex interplay between technological advancements and market economics. 
While the reduction in gas fees marks a technological success, making the platform more accessible, it also introduces challenges to Ethereum’s economic model by slowing the reduction of supply, potentially <a href="https://www.ethnews.com/ethereums-unexpected-turnaround-could-it-hit-record-highs-in-september/" rel="noopener noreferrer nofollow">impacting its price appreciation</a> in the short term.
The post <a href="https://www.ethnews.com/ethereum-gas-fees-plummet-is-it-time-to-buy-before-prices-soar/" rel="noopener noreferrer nofollow">Ethereum Gas Fees Plummet: Is It Time to Buy Before Prices Soar?</a> appeared first on <a href="https://www.ethnews.com" rel="noopener noreferrer nofollow">ETHNews</a>.

Ethereum Gas Fees Plummet: Is It Time to Buy Before Prices Soar?

ETHNews

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