Is Ethereum Dead? Gas Fees Collapse, Price Tanks, Whales Flee

Key Insights

• According to reports, Ethereum’s on-chain activity has slowed down along with its gas fees dropping to their lowest levels in the last five years.
• The average transaction fees on the Ethereum network have dropped to as low as $0.168, which hasn't been seen since 2020.
• Over the last two weeks, the cryptocurrency has lost around 12.5% of its value and is currently trading just below $1,600.
• According to Quinlivan, this is a great time for builders to take advantage of the quietness.
• The analyst notes that, historically speaking, low fees often come right before major market movements.

Ethereum, the second most powerful blockchain in the world, has gone relatively quiet so far.

According to reports, its on-chain activity has slowed down by a wide margin. And along with this problem, its gas fees have also dropped to their lowest levels in the last five years.

While this might come as welcome news for developers and long-term network users, it shows that investors are hesitant and afraid.

Despite this “doom and gloom” phase, Ethereum isn’t standing still.

The long-awaited Pectra upgrade is on the horizon, and blockchain developers are standing in wait.

Here are the major updates for Ethereum so far.

Ethereum Transaction Fees Hit Near-Zero

According to recent data from Santiment, the average transaction fees on the Ethereum network have dropped to as low as $0.168, which hasn't been seen since 2020.

Historically, fees have dropped to as low as $0.02. However, this $0.168 low shows a major drop in network usage.

This means that fewer people are transacting with Ethereum or interacting with its smart contracts.

Keep in mind that Ethereum’s gas fee model is based on supply and demand.

When activity rises, users compete by paying more fees to have their transactions processed more quickly.

However, when the network grows quiet like this, fees fall along with the dying rush for network resources.

Right now, Ethereum is in the middle of the second scenario.

According to Santiment’s Brian Quinlivan in a recent blog post, this drop in user activity could be an indicator of cautious behavior from traders, many of whom are waiting for the ongoing market crash to end before re-entering.

Traders Step Back Amid Global Uncertainty

The crypto market is one thing. However, the global market has been relatively shaky in recent weeks, with a major reason for this being the tariff issues between the US government and China.

These moves from both countries have created uncertainty across both the traditional and crypto sectors, and Ethereum has been a major recipient of these problems.

Over the last two weeks, the cryptocurrency has lost around 12.5% of its value and is currently trading just below $1,600.

Another interesting factor to note is that the cryptocurrency’s TVL has dropped by over 8% in the last month, with a current reading of $46.85 billion, according to DeFiLlama.

Whale activity has not been encouraging either, with data from on-chain analyst Ali Martinez showing that whales have sold off ~143,000 ETH in the past week alone.

A Silver Lining for Builders

While the falling fees and the fading interest from investors paint a bearish picture at first glance, it might be a good indicator for the network.

For starters, the lower gas fees make it much cheaper for developers to deploy and test new applications on the Ethereum network.

This means that more start-ups and research teams can experiment more freely in an arrangement that will eventually help the network's TVL to bounce back strongly.

According to Quinlivan, this is a great time for builders to take advantage of the quietness.

The analyst notes that, historically speaking, low fees often come right before major market movements.

"The more the retail community leans away from an asset,” the analyst says, “the higher its chances of a surprise rebound”

Another major factor to keep an eye out for in the Ethereum network is the upcoming Pectra upgrade, which is scheduled to go live on the Ethereum mainnet on 7 May.

This long-awaited upgrade has been delayed multiple times but is now set for its deployment.

Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.