According to the latest on-chain observations, gas fees on the Ethereum network have fallen to their lowest level in almost two months. How will this impact the price of ETH?
Ethereum Network Activity Declines Ahead of Spot ETF
In a new Quicktake PublicationA pseudonymous analyst has revealed that activity on the Ethereum network is down as gas fees have hit their lowest levels 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 average gas fee for ETH (Gwei) has fell to their lowest level since May 2024. As shown in the chart below, the 7-day moving average, which represents the average ETH gas price, has been trending downward since early June.
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A chart showing the trend of Ethereum (ETH) average gas fees (Gwei) | Source: CryptoQuant
Typically, the value of this indicator reflects the activity level of a particular blockchain (Ethereum, in this scenario). When network traffic is congested due to multiple participants transacting on the network, gas fees tend to increase.
So, the fact that ETH’s average gas fee is at its lowest level in two months only means that activity on the Ethereum network has slowed down in recent weeks. Naturally, this slowdown in activity signals a decrease in investor demand, as most of them may not be too interested in the Ether token at the moment.
Interestingly, Quicktake’s analyst noted that gas rate increases tend to coincide with price hikes. It seems that a Ethereum price increase may be associated with increasing network activity, as it seems natural that bullish market sentiment encourages more participants to enter the network.
“Could this be the calm before the storm ahead of the upcoming Ethereum spot ETF approval?” the analyst added. This implies that the imminent launch of the Ethereum ETF could prove crucial for ETH price action, as the funds’ trading debut could catalyze an increase in network activity.
Ultimately, this could result in a significant upward move in both average gas costs and the price of ETH.
ETH Price Overview
As I write this, the ethereum price Bitcoin price is hovering around $3,139, reflecting a nearly 2% gain in the past 24 hours. According to data from CoinGecko, the altcoin has gained over 4% in the past 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
