Gas fees on the Ethereum network have recently dropped to their lowest levels in six months, reaching an average fee of $1.12 per transaction. This decline in gas fees is seen as a potential signal for an upcoming altcoin rally by analysts from crypto analytics platform Santiment. Gas fees tend to peak during market tops and decline during market bottoms, with the current low fees potentially indicating an increase in activity on the Ethereum network. This could lead to a quicker turnaround for Ethereum and associated altcoins, despite the recent market retracement and reduced demand on the network.
Ether has experienced a 4.3% gain in the past week, supporting the notion of a slight rally in its price. Additionally, three Ethereum layer-2 networks—Optimism (OP), Arbitrum (ARB), and Polygon—were among the top five best-performing assets in the top 50 cryptocurrencies by market cap, with significant gains. However, the reduced network activity has resulted in an increase in the circulating supply of Ethereum, with more Ether being issued compared to burned over the past month. This stands in contrast to the previous five months, which saw a steady deflation in the supply of Ethereum.
The Ethereum network reported a robust income of $365 million in the first quarter of 2024, marking a 155% year-on-year revenue growth. This impressive growth was driven by the surge in decentralized finance (DeFi) activity during the quarter, leading to heightened network participation. Ethereum’s fee revenue, generated through user transactions, reached $1.17 billion in Q1, marking a 155% increase from the same period in 2023 and an 80% upswing from the previous quarter. The surge in DeFi applications has propelled Ethereum’s average daily transactions in 2024 to levels close to those witnessed during the peak of Ethereum in 2021.
The reduced gas fees and potential increase in network activity on Ethereum could lead to an upcoming altcoin rally, as suggested by Santiment analysts. The decline in gas fees to their lowest levels in six months could signal a turnaround for Ethereum and associated altcoins, despite recent market retracement. The slight rally in Ether’s price and the performance of Ethereum layer-2 networks further support the notion of a potential altcoin rally in the near future. The increase in circulating supply of Ethereum, however, stands in contrast to the previous trend of deflation in the supply of Ether.
Overall, the Ethereum network is seeing significant growth in revenue, with $365 million reported in the first quarter of 2024 and a 155% year-on-year revenue growth. This growth is attributed to the surge in decentralized finance (DeFi) activity during the quarter, driving increased network participation. Ethereum’s fee revenue reached $1.17 billion in Q1, marking a substantial increase from previous periods. The network activity in 2024 has surpassed levels seen in previous years, with an average of 1.15 million daily transactions, close to the peak levels witnessed during Ethereum’s successful run in 2021.
