Ethereum fees drop to 5-year lows

Amid declining on-chain activity, Ethereum network fees have dropped to five-year lows. The average transaction cost for the world’s second-largest cryptocurrency by market cap is now around $0.16 — a level last seen in May 2020.

Minimal fees and reduced activity

According to analysts at Santiment, such low fees are the result of a significant drop in the number of users sending ETH and interacting with smart contracts across DeFi, NFTs, and other decentralized applications. Researcher Brian Quinlivan emphasized that the metric is closely tied to network congestion.

«The reduction in fees coincides with a slowdown in network activity. Right now, transactions are cheaper than they’ve been in the past five years,» he explained.

An opportunity for accumulation

Quinlivan believes that historically, periods of low fees often precede market rebounds. He noted that buying during times of reduced retail investor interest could be «less risky than usual.»

«When fees drop below $1, it’s usually a promising sign that the crowd has lost interest. For developers, this is a great time to build value. For investors, it may be a good moment to look for entry points,» he said. He also added that many have already «written Ethereum off,» which might be a positive signal for future growth.

At the time of writing, Ethereum is trading just below $1,600, having lost more than 12% in value over the past two weeks.

Earlier, analysts said ETH had dipped below its realized price, a sign of capitulation that could indicate a potential trend reversal in the medium term.