Ethereum gas fees fell to a six-month low. Is the copycat season coming?

Although Ethereum prices edged higher over the weekend, the Ethereum network’s gas fees have fallen to a six-month low, which analysts at crypto analytics platform Santiment said could be a sign that altcoin season is coming.

On April 27, the average fee on the Ethereum network dropped to $1.12, according to an April 28 post from Santiment.

Santiment writes: "Traders have historically been caught between emotional cycles of feeling like a cryptocurrency is about to 'pop' or feeling like 'it's dead,' which can be observed through transaction fees."

Source: Santiment

Santiment explains that fees tend to peak near local market tops and fall back to "resting state" lows near market bottoms.

In February, Ethereum’s gas fees reached their highest level in eight months amid intense interest in an experimental token standard called ERC-404.

The analysis platform suggests that lower gas fees could signal a future rise in Ethereum network activity and signal the beginning of an altcoin rally.

“With a major market correction over the past six weeks, lack of demand and network pressure may help ETH and related altcoins turn around sooner than many expect.”

According to data from CoinGecko, Ethereum price is up slightly, rising 4.3% last week.

On April 27, Ethereum Layer 2 Network Optimism (OP), Arbitrum (ARB) and Polygon accounted for three of the top 5 best-performing assets among the top 50 cryptocurrencies by market capitalization. The increases were 11.7%, 3.5% and 2.8% respectively.

Source: Luke Martin

Meanwhile, reduced network activity caused Ethereum’s circulating supply to surge to last month’s highs.

According to Ultrasound.money data, in the past 30 days, 74,458 new ETH were issued while only 57,516 ETH was burned, 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 increase in ETH-based inflation, more than 437,000 ETH have been burned since the network moved to a proof-of-stake consensus mechanism (known as the “Merge”) on September 15, 2022.

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