Ethereum (ETH) has recorded a significant increase in on-chain transaction fees, reversing the downward trend since April 2024. According to IntoTheBlock, this increase is primarily driven by decentralized finance (DeFi) activity.
The weekly gas fee for Ethereum currently stands at 67 million USD, up 17.9% from last week. Although transaction costs have risen significantly, this reflects an increase in activity on the Ethereum network, especially on DeFi platforms.
Reasons driving Ethereum gas fees higher
Key factors driving high gas fees include:
Strong DeFi activity: The use of DeFi applications such as trading, borrowing, and lending has pushed transaction volumes to high levels.
The crypto market is volatile: As Bitcoin (BTC) fell below the critical threshold of 100,000 USD, most other altcoins faced downward pressure. However, with BTC experiencing a slight recovery, some altcoins have regained balance, prompting traders to restructure their portfolios, indirectly increasing transaction fees on the Ethereum network.
Despite a strong increase in on-chain activity, ETH has dropped more than 2% over the past week. As of now, ETH is trading at 3,909 USD, down 0.3% on the day. Many investors expect Ethereum to break through the resistance level of 4,000 USD, similar to Bitcoin's upward trend.
ETH price chart 1 hour | Source: TradingView
Notably, high transaction fees are not deterring investor participation. Instead, it creates profit opportunities for those willing to pay high fees to take advantage of market conditions.
IntoTheBlock's post also mentions a decline of 778 million USD in ETH flowing into exchanges. This reflects the trend of investors withdrawing ETH to personal wallets, a move often interpreted as long-term confidence in Ethereum's value potential.
However, the net inflow recorded an increase of 42 million USD, likely driven by short-term selling pressure as investors react to market volatility.
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