Ethereum shows bullish signal amid increased activity

A five-year low in Ethereum’s gas fees was reached earlier this week, with some blaming the decline on users and apps switching to more popular blockchains. After stabilizing following the August 5 decline, Ethereum has been in consolidation mode, but activity on the chain has been elevated.

Analyzing past data, a sharp decline in transaction fees on Ethereum may portend a positive development for the ether (ETH) tokens that power the network. Gas denotes the required expense incurred by a user to execute a transaction on the network. A low-priority transaction could cost as little as 1 gwei or less, which hasn’t happened in years. Earlier this week, fees dropped as low as 0.6 gwei

Compared to the 83.1 gwei levels in March, when the network experienced a surge in activity, the fees indicate a more than 95% decrease. The migration of meme season and Dapp interactions to faster and less expensive blockchains like Solana and Layer 2, along with the eagerly anticipated Dencun upgrade that increased network efficiency and consequently lowered gas fees, are the main causes of Ethereum’s gas fee price decline to a five-year low.

Ethereum bulls also benefit from Donald Trump’s news. Trump, whose estimated net worth by Forbes is $4.5 billion, revealed that he received $7.2 million from an NFT license agreement and invested at least $1 million and maybe as much as $5 million in a “virtual Ethereum key.”

Historically, a major topic of discussion surrounding Ethereum has been whether or not its gas fees are excessive. Its gas fees have significantly decreased this year, partly because of rollups. When they were disproportionately elevated, there was a crash. A systemic market should exhibit periodic spikes when demand is at its highest. Those who see problems with these developments are misguided in their predictions for the direction of cryptocurrency.

Though there is less selling pressure now, the altcoin is still below the moving average lines and above the $2.3K support level. The resistance at $2,800 or the 21-day moving average has capped bulls from further upsides.

The altcoin is presently holding the $2.6K support level. However, the super altcoin could drop to as low as $2,000 or $1,674 if it breaks below the current $2.2K support level. Ether was valued at $2.62K at the time of writing.