Ethereum’s fees hit a six-month low as ETH shows bearish signs
Ethereum’s network fees reached a six-month low in the past seven days, reflecting a decrease in network usage. The drop in fees can be attributed to the increased popularity of Layer 2 solutions, which offload transactions from the Ethereum mainnet. This aligns with Ethereum co-founder Vitalik Buterin’s roadmap to enhance scalability. However, the decrease in network activity coincided with a bearish trend in ETH metrics, with a 6% drop in price and a decline in daily transactions and active addresses.
Ethereum’s network activity dwindles
Recent data from IntoTheBlock reveals that Ethereum’s fees have plummeted by over 29% in the past week. This drop in fees is attributed to the utilization of over 50 live Layer 2 networks, as indicated by Artemis’ data analysis. The overall activity on the Ethereum network has declined, and the number of daily active addresses has also decreased.
Interestingly, this decline in usage is surprising given the decrease in gas price. ETH’s gas price has dipped from 47.5 Gwei to 8.5 Gwei over the last month, according to data from Ycharts.
Ethereum turns bearish
Alongside the decline in network activity, Ethereum’s price has also experienced a bearish trend, with more than a 6% drop in the past seven days, and the cryptocurrency is currently trading at $2,920.99. Analyzing Glassnode’s data, a decrease in the number of addresses with balances greater than $100k is observed, suggesting that whales are selling their ETH holdings. Additionally, data from Sentiment indicates an increase in ETH exchange inflow and supply on exchanges, pointing toward a potential sell-off that may have triggered the price correction.
The negative price action has also had a detrimental effect on market sentiment, with Ethereum’s weighted sentiment dropping in recent days, indicating a dominant bearish sentiment surrounding the token.
Potential further price decline in Ethereum
An analysis of Ethereum’s daily chart reveals that the Relative Strength Index (RSI) and Money Flow Index (MFI) are registering negative trends, suggesting the possibility of a further price drop. Currently, ETH is resting under its 20-day Simple Moving Average (SMA) and has touched the lower limit of the Bollinger Bands, which could potentially trigger a trend reversal.
Source: Artemis, Santiment, TradingView
