Ethereum, the world’s second-largest crypto has registered some notable activity. As highlighted by prominent on-chain analytics firm Santiment, ETH’s average transaction fees have fallen by 70% to $4.28 after its previous peak of $14 in early May.
Despite being widely used, the ETH network has been known to turn consumers away because of the high gas costs associated with network transactions.
Gas fees are the computational resources essential to carry out transactions on the network. There can be various reasons for high gas fees such as popularity & network congestion – Limited gas space per block – Varied gas consumption based on tx complexity – Increased complexity of dapps & smart contracts
Santiment believes the Ethereum network will benefit from the falling transaction cost as more people would be able to use the network due to affordability, thereby boosting its utility.
Moreover, there have been serious efforts to address Ethereum’s scalability issues, notably the Cancun-Deneb upgrade that targets the scalability of the Ethereum blockchain.
Here, Proto-Danksharding, also known as EIP-4844, is the main focus of the update. Proto-Danksharding is a critical component of Ethereum’s long-term rollup-centric roadmap and is anticipated to enhance data accessibility for rollups and lead to a large decrease in gas fees on Ethereum Layer-2 rollups.
Along with the decreased costs, Ethereum is now trading at an all-time low of 9.9% on exchanges as owners have displayed stronger convictions than selling off and held onto their assets more firmly.
The amount of ETH on exchanges has decreased to levels last seen in the early days of the altcoin as staking consumes the available tokens.
Since the Shapella upgrade, more than 4 million more coins have been deposited and added to the Eth network, indicating that major Eth holders are increasingly choosing to create passive income rather than sell their holdings.
Ethereum Headed For A Price Upswing
Market experts believe that this decrease in supply on exchanges is a positive sign as it might indicate an impending price upswing and a bull run.
In fact, both ETH and BTC have moved significantly off exchanges, which is why investors continued to paint a bullish picture of the assets.
According to data from Coinglass, funding rates for BTC and ETH have continuously been favorable on a number of exchanges. This implied that the majority of investors were betting on an eventual rise in the price of both cryptocurrencies.