Ethereum [ETH] is hovering near its all-time high for quite some time now. There has been a possibility of a supply crunch scenario that is driving the price factor upward, due to the fact that the staking contract hit 8.2 million ETH with another 8 million tokens currently locked in the DeFi sector. Moreover, about 860k worth of ETH left the centralized exchanges, lowering the availability of the coin’s total supply and thereby increasing the likelihood of an impending supply squeeze condition.
However, there is a threat to Ethereum’s bullish price movement as the average network fee currently rose to a record high of $63.50, the highest in five months, as observed by prominent on-chain analytics platform, Santiment. In their own words, the tweet read,
“Ethereum is sitting at $4,780 at the time of this writing, and optimism that $5k is around the corner appears high. One of the few things holding $ETH back is the fact that the average network fee sits at $63.50, which was last this high on May 12th.”
Here’s why Ethereum’s [ETH] price dominance might get delayed
The latest price surge and the overall market buoyancy might get stifled as high transaction fees continued to be the cause of concern. In fact, recently privacy enabled Brave browser opted for Solana blockchain for its ability to scale up transactions and cut down costs, instead of Ethereum.
With respect to Bitcoin [BTC], the two largest crypto assets by market cap have had issues with high transaction cost for some time now but this month, Ethereum’s network fees rose significantly higher than the king coin. According to data in bitinfocharts, the average ETH transaction fee was currently sitting at $56.58 compared to $4.69 in the Bitcoin network, a massive 1106% higher.
Moreover, earlier this month, the leading altcoin had witnessed its first week of negative supply issuance driving the transaction fees a notch higher. Interestingly, more than 724 ETH or nearly $3 billion were destroyed since the London upgrade was newly introduced in August 2021. Despite the subsequent deflationary phenomenon, Ether supporters are encouraging users to migrate and utilize its emerging layer two ecosystems. In a nutshell, high gas fees have affected a majority of the users and caused them to opt for other cheaper options.