According to the latest on-chain observation, gas fees on the Ethereum network have dropped 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 Quick take-postA pseudonymous analyst revealed that activity on the Ethereum network has slowed, with gas fees hitting their lowest levels in recent weeks. This is despite the upcoming approval and launch of the Ethereum spot ETF (exchange-traded fund).
According to data from CryptoQuant, the average ETH gas fee (Gwei) dropped to their lowest point since May 2024. As can be seen in the chart below, the 7-day moving average, which represents the average ETH gas price, has been in a downward trend since early June.
Related reading: Crypto Fear & Greed Index Drops to Extreme Fear for First Time in 1.5 Years
A chart showing the trend of Ethereum (ETH) average gas fees (Gwei) | Source: CryptoQuant
Normally, the value of this indicator reflects the activity level of a particular blockchain (in this scenario, Ethereum). When network traffic becomes congested due to multiple participants transacting on the network, gas fees tend to spike.
As such, the fact that ETH’s average gas cost is at a two-month low only means that activity on the Ethereum network has cooled down in recent weeks. This drop in activity naturally signals a decrease in investor demand, as most investors may not be that interested in the Ether token at this time.
Interestingly, the Quicktake analyst noted that gas rate hikes often coincide with price increases. It seems that a Ethereum price rise can be associated with increasing network activity, as it seems logical that positive market sentiment would encourage the entry of more network participants.
“Could this be the calm before the storm ahead of the upcoming approval of the Ethereum spot ETF?” the analyst added. This implies that the upcoming launch of the Ethereum ETF could be crucial for ETH price action, as the funds’ trading debut could catalyze a surge in network activity.
Ultimately, this could result in a significant upward movement in both the average gas costs and the price of ETH.
ETH price at a glance
At the time of writing, the price of Ethereum is trading at around $3,139, reflecting a surge of almost 2% over the past 24 hours. According to data from CoinGecko, the altcoin is up over 4% over the past seven days
The price of Ether faces resistance at the $3,200 level on the daily timeframe | Source: ETHUSDT chart on TradingView
Main image from iStock, chart from TradingView