Ethereum’s network fees have fallen to their lowest level so far in 2023, down to just $1.15 per transaction on average, according to the data from Santiment.
This marks a significant drop from the high fees seen in 2021 and 2022, when demand for Ethereum transactions resulted in average fees over $50 or even a few hundreds of dollars at times.
High network fees on Ethereum have historically correlated with increased utility and activity on the network. When fees are high, it indicates that the network is being heavily utilized for transactions, smart contracts, and decentralized applications (dApps). However, the downside is that high fees price out smaller transactions and traders.
Source: Santiment – Start using it today
The recent decline in fees is a positive sign for Ethereum’s utility and adoption going forward. More affordable transaction costs allow for greater circulation of ETH tokens, as well as making dApps more accessible to users. Lower fees also enable smaller transactions to take place on the network.
Looking at historical patterns, Ethereum’s utility and adoption tend to increase when ETH becomes more affordable to transact and circulate on the network. Higher utility and activity can then contribute to recovering Ethereum’s overall market capitalization and value. The recent drop in average fees below $2 suggests ETH is becoming more usable for developers and traders. If this increased affordability drives more utility, it could help Ethereum regain some of its lost market cap from the 2022 bear market.
Ethereum indicators show mixed signals
Looking at the technical indicators, Ethereum’s price action has been mixed lately. ETH is currently trading around the $1600 support level. The MACD (moving average convergence divergence) histogram bars are declining, suggesting weakening upside momentum. However, the MACD line remains above the signal line, which is a bullish sign.
In terms of support and resistance zones, Ethereum faces support around $1600 and $1500 if selling pressure increases. On the upside, ETH will encounter resistance around $1800, near the previous support level, as well as at the psychological barriers of $2000 and $2140.
Traders will be watching to see if Ethereum can maintain its network momentum while fees remain low. More adoption and utility for Ethereum could help validate its long-term prospects as a leading blockchain network. But the crypto markets remain volatile, so ETH will need to overcome technical resistance to make a convincing move higher.
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