According to the latest on-chain observation, gas fees on the Ethereum network have fallen to their lowest level in nearly two months. How will this impact the price of ETH?
Ethereum Network Activity Wanes Ahead Of Spot ETF
In a new Quicktake post, a pseudonymous analyst revealed that the activity on the Ethereum network has been on a decline, with gas fees touching their lowest level in recent weeks. This comes despite the upcoming approval and launch of the Ethereum spot ETF (exchange-traded fund).
According to data from CryptoQuant, the ETH average gas fees (Gwei) have dropped to their lowest since May 2024. As shown in the chart below, the 7-day moving average, which represents the average ETH gas price, has been on a downward trend since the beginning of June.
Related Reading: Crypto Fear & Greed Index Falls To Extreme Fear For The First Time In 1.5 Years
A chart showing the trend of Ethereum (ETH) average gas fees (Gwei) | Source: CryptoQuant
Typically, this indicator’s value reflects the activity level of a particular blockchain (Ethereum, in this scenario). When the network’s traffic becomes clogged up due to several participants transacting on the network, the gas fees tend to witness a spike.
As such, the ETH average gas fees being at a two-month low only implies that activity on the Ethereum network has cooled off in recent weeks. Naturally, this slump in activity signals a decrease in investor demand, as most investors may not be too interested in the Ether token at the moment.
Interestingly, the Quicktake analyst noted that increases in gas fees tend to coincide with price jumps. It appears that an increase in Ethereum prices can be associated with rising network activity, as it only seems natural that bullish market sentiment would encourage the entry of more network participants.
“Could this be the calm before the storm ahead of the upcoming approval of the Ethereum spot ETF?” the analyst added. This implies that the impending Ethereum ETF launch could prove pivotal to the ETH price action, as the trading debut of the funds could catalyze a surge in network activity.
Ultimately, this could result in a significant upward movement of both the average gas fees and the price of ETH.
ETH Price At A Glance
As of this writing, the price of Ethereum stands around $3,139, reflecting a nearly 2% rise in the past 24 hours. According to data from CoinGecko, the altcoin is up by more than 4% in the last seven days
The price of Ether faces resistance at the $3,200 level on the daily timeframe | Source: ETHUSDT chart on TradingView
Featured image from iStock, chart from TradingView
