Attention to All Crypto Enthusiasts: Ethereum Gas Fees Drop to Five-Year Lows
If you’ve been following Ethereum closely, you’ll be pleased to learn that its gas fees have plummeted to levels not seen in five years. This significant drop is a result of increased layer-2 activity and the Dencun upgrade that took place in March. Let’s dive into how this development might impact Ethereum’s supply and prices:
Impact on Ethereum Supply
- The reduction in fees could have implications for Ethereum issuance and burnt amounts when gas is utilized. This shift may change the deflationary nature of Ethereum’s supply, potentially affecting prices in the near future.
- According to Kaiko, this new development might hinder potential price increases despite demand drivers like spot ETH ETFs.
ETH Supply and Inflation
- Since April, there has been an increase in the total supply of ETH due to the drop in network fees and a lower base fee burn rate from EIP-1559.
- Based on data from ultrasound.money, Ethereum’s supply has increased by 0.2% since early April, equating to an additional 223,000 ETH worth approximately $591 million added to the circulation.
- Although the ETH supply remains lower than previous levels, the rapid inflation prior to these recent changes has come to a halt.
- Current analytics indicate that ETH supply is increasing by 0.71% per year on a weekly basis, with around 16,500 ETH being added weekly.
- Comparatively, Bitcoin experiences a slightly higher supply inflation rate at 0.83% over the same timeframe.
- The model predicts that ETH supply will drop below 120 million by the end of this year, maintaining its deflationary trajectory.
ETH Price Movement
- In the past 12 hours, ETH prices have climbed to reach $2,662 during the Asian trading session on Tuesday morning.
- Despite this increase, prices have remained range-bound since the recovery on Aug. 9, struggling to surpass the $2,750 resistance level in what could be a volatile week for the crypto market.
- Analysts believe that the current low gas fees could signify a potential price bottom for ETH, as historically, rock-bottom gas fees have often preceded a mid-term price bottom.
Hot Take: What Does This Mean for You?
As a savvy crypto enthusiast, it’s essential to stay informed about the latest developments in the Ethereum ecosystem. The recent drop in gas fees could have far-reaching implications for Ethereum’s supply dynamics and price movements. Keep a close eye on how these changes unfold and consider the potential impact on your investment strategy. Remember, knowledge is power in the ever-evolving world of cryptocurrency!
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Sources:
– Kaiko Data Twitter: https://twitter.com/KaikoData/status/1825544100780871883
– Ultrasound Money: https://ultrasound.money/
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