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As Ethereum gas price is at its lowest, ETH might pick up its market presence again.
Ethereum is one of the most popular currencies in the cryptomarket. Yet, investors have concerns when it comes to investing in it. Reason: high gas fee. Market analysts consider it as one of the most fatal flaws, making way for other ‘Ethereum killers’ in the crypto market. Nevertheless, Ethereum is the most popular cryptocurrency in the market after Bitcoin. It is the Ethereum gas fee that discourages investors from investing in it though they are very well aware of the fact that the crypto market doesn’t run on free transactions. And also, crypto is known for its democratic ways of functioning and therefore, is supposed to be accessible to everyone and anyone. A high gas fee definitely defeats this very purpose, as not every user has the capacity to pay a hefty gas fee. A hefty gas fee made many investors vary about its decline when its competitors gain ground in the market. In this context, it is quite heartening to know that the Ethereum gas fee is on a constant decline for the last nine months and has reached an all-time low. It is because there has been a decline in activity on the Ethereum front which again might be due to the high gas fee. However, there is a ray of hope here as a number of Ethereum holders has remained stable.
For proof-of-work blockchain, Gas fees have a standard feature, But for Ethereum, they drove developers and users away from it. Until, Ethereum transitions to a proof-of-stake consensus algorithm, the gas fee might remain consistently high, which is not a workable option for the ETH token, particularly when a number of crypto options exist that offer faster transactions with lower fees. These alternatives are Ethereum’s biggest competitors. However, ETH investors need not worry about its market dominance. But why did Ethereum gas fees reach their lowest? Here are a few possibilities that led to its decline.
Ethereum Block Space is Running Ethereum Gas Fee Down
One of the most prominent and possible reasons that might have led to this is due to the decreasing demand for Ethereum block space. Because blocks only contain a finite amount of space for transactions, during instances of high congestion, Ethereum investors might be able to bid up the price that they are willing to pay to have their transactions processed efficiently in the next block. However, when the activity over the network decreases, the network lowers the amount of gas needed to reflect demand.
Also, another possible reason why the Ethereum gas fee might have suddenly gone down is that NFTs have slowed down, finally! Even when the crypto market was on its edge, NFTs soared to record highs. How are NFTs and Ethereum linked? Well, The NFT marketplace OpenSea has consistently been of the biggest gas users on the Ethereum network over recent months. But NFT transactions have finally slowed down, leading to a decline in Ethereum gas fees. But OpenSea is not the only one utilizing Ethereum’s network. Uniswap is also one of the most popular decentralized exchanges on Ethereum, but even this platform is witnessing a decline in transactions since last November.
For several Ethereum users, this decline in Ethereum gas fees has emerged as a blessing. As network transactions are now cheaper, traders will be able to take advantage of smaller arbitrage opportunities and improve their capital efficiency. But nevertheless, they should be aware of the upcoming circumstances in the crypto market. Currently, cryptocurrencies are at their most volatile state. So investors need to proceed very carefully before making any rash decision.