In recent weeks, Ethereum (ETH), one of the most valuable assets in the cryptocurrency market, has not enjoyed favorable sentiment due to its struggling price and unstable on-chain performance. The general market condition has not offered much reprieve either, as most altcoins have failed to maintain an upward momentum. Fortunately, the latest on-chain revelation offers some hope for the price of Ethereum.
Ethereum Average Fee Drops To Lowest Level In 2023
On-chain analytics have been helpful in providing real-time insights into crypto market trends. And the latest on-chain revelations have highlighted a plunge in Ethereum network fees, which might prove to be a turning point for the cryptocurrency’s market value and performance.
According to the on-chain analytics platform, Santiment, the Ethereum network fees have dropped to their lowest levels in 2023, with each transaction averaging about $1.15 as of this writing. This reflects a significant fall from the huge fees seen in 2021 and 2022, with demand for processing power causing the average fees to reach above $50.
Historically, such a decline in fees is a positive sign for Ethereum’s utility and adoption, as lower costs make it more profitable and worthwhile to use the network. Santiment also noted that rising utility is often the case due to Ether tokens becoming more affordable to circulate.
It is worth noting that the impact of this development can spread to the overall market value of the digital asset. Increased utility and adoption can contribute to the recovery of Ethereum’s market capitalization and value.
The Effect On ETH Price?
Indeed, the plunging network fees positively benefit Ethereum and its users, especially as it can improve other network metrics and parameters. However, this development has not significantly impacted ETH price, as it seems to be struggling to break out from under the current selling pressure.
On Thursday, September 21, the cryptocurrency fell beneath the psychological $1,600 level for the second time this month. And the Ether token continues to trade below this price mark, with a roughly 2.6% decline in the past three days.
Investors will be watching to see if Ethereum can build positive network momentum while fees are low. However, it remains to be seen whether this will be enough to propel the ETH price out of consolidation, especially as there are no signs of buying pressure from Ethereum whales.
There are no signs of buying pressure from #Ethereum whales yet! pic.twitter.com/oqBbdbaOlb
— Ali (@ali_charts) September 21, 2023
Moreover, the dwindling number of major ETH holders adds zero optimism to this scenario. This is because such a decline in whale holdings can make the Ethereum price increasingly susceptible to downward pressure.
According to CoinGecko data, the Ether token trades for $1,593, reflecting a 2.6% price dip in the past week. Ethereum is currently the second-largest cryptocurrency, with a market capitalization of $191.6 billion.
Ethereum price trading below $1,600 on the daily timeframe | Source: TOTAL chart on TradingView
Featured image from The Economic Times, chart from TradingView