Gas fees for Ethereum (ETH) have fallen to new lows amid anticipation of a spot Exchange-Traded Fund (ETF) in the U.S. As shown on CryptoQuant’s chart, Ethereum’s gas fees are at their lowest since May 2024.
Influence of gas fees on Ethereum’s price
CryptoQuant’s analyst Woo Minkyu wrote in a Quicktake piece that Ethereum’s low gas fees paint a picture of calm network activity. The analyst highlights that Ethereum’s price tends to rise when gas fees increase, and vice versa.
Ahead of the Upcoming Approval of the $ETH Spot ETF“Trend shows that gas fees are at their lowest since May 2024, indicating a quieter #Ethereum network activity. It can be observed that when gas fees increase, Ethereum prices tend to rise as well.” – By @Woo_Minkyu Read more… pic.twitter.com/baajlxNdAj
— CryptoQuant.com (@cryptoquant_com) July 12, 2024
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For context, on the Ethereum blockchain, gas fees refer to the cost needed to carry out a transaction on the network. It is important to note that there is no direct relationship between gas fees and price. However, the decrease in network fees results in fewer ETH being burned from the total supply.
As seen in economics, a higher supply over demand leads to a decrease in the value of a digital asset. For Ethereum, this means investors holding the coin will see a decrease in the value of their investment.
Is ETH preparing for a rally ahead of ETH ETF approval?
The CryptoQuant analyst concludes by asking if Ethereum’s current calm can be preparation ahead of spot ETF approvals. In hindsight, this could be the case because investors tend to avoid making investments ahead of a big announcement.
Expectations were high that the SEC would approve a spot Ethereum ETF this week, as reported in our previous article. With the end of the week already here, the market is anxiously awaiting what will happen next. Speculation remains as to whether the new product will flop or not.
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As of this writing, ETH is trading at $3,081, demonstrating a decline of 2.8% in the past 24 hours, with the market cap pegged at $372 billion. The trading volume also decreased by 11% to $13 billion, indicating a reduction in selling pressure.
