Breaking: ETH Transaction Fees Just Hit An All-Time Low In A Year-Long Run

ETH has taken a serious hit ever since the clouds of trade war have been seen looming on the horizon. After many days of volatility, ETH finally recovered its price to the $2,700 mark on Wednesday. However, its transaction fee has declined to an all-time low. The reduced transaction cost and a slight bullish momentum could help it overcome the $2,850 critical resistance. 

According to data released by Cryptoquaint, ETH transaction fees hit an all-time low. The last time the transaction fee reached this level was in August 2024, when Israel-Hamas war tensions peaked. After this, ETH consolidated for the next four months. This renewed decline in transaction fees has reduced ETH Layer 1 activity since the February market crash. Moreover, analysts have noticed a growing shift from ETH to SOL and Layer 2, which can also affect the fee on top L1. 

Source: CryptoQuant

The Impact 

This low transaction fee could impact the supply side of things. Low transaction fees generally imply a lesser amount of burnt ETH, which can increase the overall supply of ETH in the process. The burning mechanism was introduced back in 2021. This feature burns a portion of the coin to keep the supply slightly deflationary.  

The combination of a rising supply and low demand has made the coin sluggish, demonstrating bearish sentiment in investors. However, analysts at Santiment believe otherwise. An analyst working in tandem with Santiment stated, “When users are not paying high prices to move their ETH or tokens, it is typically a good sign for mid-term and long-term price outlooks, [as] reduced costs make it easier for new buyers to enter the market,” 

The analyst further argued that high transaction fees can sometimes trigger corrective protocols. Meanwhile, a low transaction fee will allow new users to dip their toes in the game. Which can play a key role in “allowing the network’s utility to rise to a prosperous rate.”