Ethereum (ETH) is experiencing its most significant decline in gas fees in three years. Data from Dune Analytics indicates that the median gas fee has dropped to 6.43 gwei, marking its 7th lowest recorded price in a single day over the past three years. 

As Ethereum continues to face stiff competition from other Layer-1 blockchain solutions such as Solana, Ethereum (ETH) has managed to maintain its dominance. Despite this, Ethereum continues to be the favored option for decentralized applications (dApps) and decentralized finance (DeFi) projects. However, the increasing competition may contribute to potential network decongestion on Ethereum, leading to lower gas fees. 

According to a report from Santiment, the average transaction fee on the Ethereum network has decreased to $1.12 per transaction, marking the lowest average cost the coin has seen in a single day since October 18th. 

Furthermore, the correlation between transaction fees and market sentiment suggests that traders often oscillate between two distinct emotional cycles: optimism, where they believe that a cryptocurrency is poised for massive gains, and pessimism, often described as a belief that a cryptocurrency is stagnant or declining. These sentiments are mirrored in transaction fees, which is tend to increase during market peaks when optimism prevails and decrease during market bottoms. 

Nevertheless, the analyst expressed optimism about the market, noting that it has undergone a retracement over the last six weeks. Consequently, the decrease in transaction fees shows a lack of demand and reduced strain on the ETH network. This could potentially catalyze a faster recovery for Ethereum and other related altcoins. 

Meanwhile, the decrease in transaction fees had an immediate impact on the short-term movement of ETH prices. At this time of writing, Ethereum (ETH) is trading at $3,160.34, 4.33% lower in the last 24 hours.