Ethereum’s Transaction Fees Drop Significantly

Ethereum’s transaction fees have dropped to their lowest level in a very long time, depicting a bullish setup for investors. Ether’s average transaction cost has fallen to 0.00005 ETH, a massive decline from 0.005 ETH recorded in early 2024.

Ether’s Performance

ETH price has struggled to keep pace with other major altcoins, declining by 18% year-to-date (YTD).

A decrease in Ether transactions can be linked to EIP-1559’s fee-burning mechanism receiving approval. Availability of layer-2 scaling solutions like Arbitrum and Optimism has also reduced network congestion.

Ethereum Fees Drop 97%

According to an analysis shared by Santiment, the average fee of an Ethereum transfer stood at $0.41 on February 18. This marks a drastic drop compared to a high of $15.21 seen in the last 2 years. Low transaction fees suggest that the network is not overly crowded, which is a positive sign for mid-term and long-term price outlooks.

Santiment noted that traders often experience low fee levels when prices are perceived as ‘low’ or ‘bearish’. Reduced costs facilitate new investors entering the market, while high transaction costs indicate significant network activity and potential issues for traders due to rising overhead costs.

> 💸 The average fee of an Ethereum transfer currently sits at just $0.41, in contrast to the $15.21 high point of the past 2 years. When transaction fees are low, the network is generally less congested.

In situations where fees are extremely high, some traders might be pushed away, initiating a short-term market correction. Conversely, lower fees typically encourage return to the network, enhancing overall utility.

ETH Whale Activity

Ethereum has experienced massive selling pressure, even as other digital assets benefit from a Bitcoin-led rally. ETH price has dropped by 20% in the past 30 days; however, it has hinted at a reversal as Ether price has gained over 4% in the last week, trading at an average price of $2,724 as of the latest update. The 24-hour trading volume has decreased by 20%, standing around $20 billion.

Data from SpotOnChain shows a large crypto whale depositing about 23,330 ETH (worth $61.9 million) to Binance at an average price of $2,654 over the last four days.

> A giant whale has withdrawn a net 104,509 ETH (worth $279M) from #Binance at an average price of $2,669 over the past two days.

Most of these ETH have been supplied or staked across various platforms like Etherfi, Lido Finance, Spark, Compound, Aave, Gearbox, and Morpho. The whale’s entry and exit points appear suboptimal, as accumulation occurred at highs and offloading at lows. The same wallet withdrew around 104K Ether (valued at $279 million) from Binance on or before February 13.