- Ethereum gas expenses have dropped to their lowest in five years due to Layer 2 expansion.
- The Dencun upgrade has reduced transaction costs significantly across the Ethereum network.
- The rising ETH supply is putting pressure on its market price despite increased demand from recent developments.
Ethereum gas fees have reached their lowest point in five years, showing significant changes within the network. This drop, reported on August 19, 2024, is due to the increased use of Layer 2 networks and the Dencun upgrade from March 2024. These developments have lowered transaction costs, affecting Ethereum’s supply and market dynamics.
Layer 2 Networks Cut Costs
Layer 2 networks are key in reducing Ethereum gas fees. These networks, like Arbitrum and Base, work off-chain and reduce the load on Ethereum’s mainnet. Users now face lower transaction costs. The Dencun upgrade introduced ‘Blobs,’ which further decreased costs, making transactions cheaper for users.
The lower transaction fees have also reduced the amount of ETH burned during operations. Since April 2024, this has led to a steady rise in the total supply of ETH. The growing supply has started to affect Ethereum’s market performance by putting pressure on its price.
Effects on Ethereum’s Market
The increase in Ethereum’s supply, driven by lower gas fees, is a key factor in its market outlook. The approval of a Spot Ethereum Exchange-Traded Fund in the United States was expected to boost demand. However, the rising supply has raised concerns. Ethereum’s price dropped over 3% since the previous day, hovering near $2,590. The trading volume increased by 30%, showing higher investor sentiment.
Despite this trading activity, Ethereum’s open interest stayed the same. This shows traders are uncertain about the future direction of the cryptocurrency. The balance between rising supply and market demand continues to shape Ethereum’s market dynamics.
Read CRYPTONEWSLAND on
google news
What’s Next for Ethereum?
The drop in gas prices and the rise in ETH supply come at a crucial time. Historically, the coin’s gas charging rates have fluctuated, especially during high-demand periods like the 2021 DeFi boom. The current trend of decreasing costs shows broader technological advancements within the ETH network. However, the growing supply creates challenges for Ethereum’s price stability, raising questions about the network’s future path.
Ethereum’s trading cap has also dropped by nearly 26% over the past 30 days, showing major selling pressure. The investors will watch closely to see how these dynamics affect Ethereum’s position in the crypto environment.
disclaimer read moreCrypto News Land, also abbreviated as "CNL", is an independent media entity - we are not affiliated with any company in the blockchain and cryptocurrency industry. We aim to provide fresh and relevant content that will help build up the crypto space since we believe in its potential to impact the world for the better. All of our news sources are credible and accurate as we know it, although we do not make any warranty as to the validity of their statements as well as their motive behind it. While we make sure to double-check the veracity of information from our sources, we do not make any assurances as to the timeliness and completeness of any information in our website as provided by our sources. Moreover, we disclaim any information on our website as investment or financial advice. We encourage all visitors to do your own research and consult with an expert in the relevant subject before making any investment or trading decision.
