Ethereum Gas Fee Drops to Six-Month Low. Is the Alt Season Coming?

Despite Ethereum’s small price gain over the weekend, gas fees on the Ethereum network have fallen to a six-month low, which analysts at crypto analytics platform Santiment say could signal the start of an altcoin season.

According to an April 28 post by Santiment, on April 27, average fees on the Ethereum network dropped to $1.12.

“Traders have historically moved between sentiment cycles of feeling like crypto is about to ‘pop’ or feeling like ‘it’s dead,’ which can be observed through transaction fees,” Santiment wrote.

Source: Santiment

Santiment explained that fees tend to peak near local market tops and fall back to “stationary” lows near market bottoms.

In February, Ethereum’s gas fees hit an eight-month high amid strong interest in an experimental token standard called ERC-404.

The analytics platform suggests that lower gas fees could signal a future uptick in Ethereum network activity and herald the start of an altcoin rally .

“With the major market correction over the past 6 weeks, lack of demand and network stress could help ETH and related altcoins turn things around sooner than many expect.”

Ethereum prices rose slightly, up 4.3% last week, according to Coingecko.

On April 27, Ethereum Layer 2 networks Optimism (OP), Arbitrum (ARB), and Polygon accounted for three of the top five best performing assets among the top 50 cryptocurrencies by market capitalization, with increases of 11.7%, 3.5%, and 2.8% respectively.

Source: Luke Martin

Meanwhile, a drop in network activity caused Ethereum’s circulating supply to surge to its highest point in the last month.

According to Ultrasound.money data, in the past 30 days, 74,458 new ETH were issued, while only 57,516 ETH were destroyed, resulting in a net supply increase of 16,979 new ETH.

This is in stark contrast to the previous five months, which saw continued deflation. Despite the recent rise in ETH-based inflation, more than 437,000 ETH has been destroyed since the network moved to a proof-of-stake consensus mechanism on September 15, 2022 (known as the “merge”).