Ethereum is approaching its historical peak, but gas fees remain low, indicating strong growth trends without the barrier of transaction fees.
This raises the possibility that Ethereum could enter a new bull phase without being limited by network congestion as in previous cycles, thanks to infrastructure upgrades.
MAIN CONTENT
Ethereum is experiencing a strong price increase, just 2% away from its historical peak, while gas fees remain unusually low.
On-chain activity of Ethereum is at a record high, but transaction fees are not increasing, thanks to protocol improvements.
DeFi market cap on Ethereum is nearing $100 billion, and the network has effectively met the demand for expansion without congestion as before.
What is happening with Ethereum's price and gas fees?
Ethereum is nearing its historical peak with a 7% increase this week, just about 2% lower than the previous peak, while gas fees remain low. This growth is markedly different from previous cycles, where every price increase was accompanied by soaring transaction fees.
In contrast to Bitcoin, which has not yet surpassed $120,000 and the market remains quite cautious, Ethereum continues to attract capital flow from Bitcoin, as evidenced by the ETH/BTC ratio surpassing 0.04 – a level not seen since the previous election season. This signal suggests that the trend of capital flow may shift to Ethereum rather than just ordinary trading ratios, hinting at a structural divergence in cash flow in the market.
The major difference lies in on-chain activity. The number of daily transactions on Ethereum has surpassed 2 million, with active wallets nearing 700,000 – a level that typically caused system overload in previous cycles. However, in this cycle, gas fees remain at record lows.
Why are Ethereum gas fees still low despite record network activity?
Transaction fees on Ethereum tend to spike significantly when the network is overloaded, but currently, despite record transaction volumes and users, gas fees remain at very low levels – a reversal of previous trends.
The most notable point is that, despite the network achieving over 2 million transactions/day and nearly 700,000 active wallets, gas fees remain near the lowest level of the cycle. The main reason comes from upgrades like EIP-1559 and layer 2 solutions that enhance performance and expand the network horizontally, rather than vertically as before.
Previously, whenever demand surged, the Ethereum network would easily fall into congestion, and gas fees would skyrocket. However, since the major improvements mentioned above were implemented, the network can handle larger volumes without putting pressure on fee markets.
"Important infrastructure upgrades have allowed Ethereum to effectively manage transaction fees even at peak times, ushering in a truly scalable era."
– Andre Cronje, Founder of Fantom, analysis from the Layer-1 Blockchain 2024 report, source: Messari Research
Has Ethereum truly met the demand for use?
Data clearly shows the evolution of fee dynamics and capacity of Ethereum. During the 2021-2022 period, NFT and DeFi boom led to transaction fees skyrocketing, often exceeding 100 gwei, hindering users and halting price growth.
However, just in the past week, the median gas fee on Ethereum has remained below 1 gwei. Notably, on August 16 and 17, the fees reached 0.396 gwei and 0.432 gwei, two of the three lowest levels in the past five years (according to Dune Analytics). This is completely different from previous cycles.
"Never before has Ethereum maintained such low fees even at times of high on-chain pressure, indicating that the network's processing capacity has improved."
– Minh Hoang, Blockchain Expert, analysis on Cryptoslate, 2024
Previously, whenever transaction fees surged, ETH prices tended to stagnate or correct – as seen in the peak reaching $4,800 in 2021 when fees and transaction costs surged, reflecting network throughput limits. Currently, although the price of Ethereum is only 2% away from the old peak, the fee metrics remain stable, creating room for on-chain activity to continue to grow.
Results: DeFi market cap on Ethereum is climbing close to $100 billion, opening opportunities for new ATH?
Thanks to its good responsiveness to on-chain demand without causing congestion, the total value locked (TVL) on Ethereum is approaching $100 billion – the highest since 2021 (according to DefiLlama). This reflects that the network is regaining trust from the market, capital is returning to DeFi projects, and the potential to reach new peaks with fewer fee barriers.
In fact, unlike previous bull runs, this time Ethereum is no longer dependent on the network's tolerance for transaction costs. If this momentum is maintained, the price increase may continue even as on-chain activity grows, opening up prospects for long-term breakthroughs.
Frequently Asked Questions
Ethereum is growing robustly, but are gas fees increasing as well?
According to data from the past week, Ethereum gas fees have not increased and are at their lowest in years, despite record transaction volumes and users, thanks to new technological improvements.
What new factor makes Ethereum different from previous bull cycles?
Ethereum has expanded capacity through EIP-1559 and layer 2 solutions, preventing transaction fees from skyrocketing when network activity explodes as it did before.
What is causing the capital flow from Bitcoin to Ethereum?
As Bitcoin stagnates and fails to surpass the $120,000 mark, many investors are shifting their capital to Ethereum as this network shows strong growth potential without the barrier of fees.
What is the current TVL on Ethereum, and what does it mean?
TVL on Ethereum is nearing $100 billion – the highest level since 2021, reflecting trust and a strong influx of capital into DeFi.
How to check Ethereum gas fees daily?
You can track the average gas fees and daily fluctuations on platforms like Dune Analytics or EtherScan for accurate updated data from open-source experts.
Source: https://tintucbitcoin.com/dong-luc-thuc-day-gia-ethereum-tang/
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