Ethereum, despite its past reputation for high transaction fees, has seen a dramatic shift. Transaction fees have plummeted to their lowest point in years, raising some interesting questions.
Fees Hit a Four-Year Low
The crypto world is experiencing some volatility, and Ethereum is feeling the pinch. High gas fees have always been a barrier for users, but now things have gotten much cheaper. Reports show Ethereum network activity has slowed significantly, meaning less demand for transaction space. This translates to transaction fees hitting a four-year low, reaching levels last seen in 2020. This slowdown impacts everyone, from regular users to validators relying on the network for income.
The Reason Behind the Drop
Data shows a roughly 60% drop in fees during the first quarter of 2025, reaching just $208 million by April 4th. Two major factors contributed to this:
- Layer-2 Solutions: The rise of Layer-2 solutions, especially Base, has significantly reduced transaction costs. Base, in particular, is processing over 80 transactions per second, making it a major player.
- The Dencun Update: This update also played a significant role in lowering the cost of scaling layers.
Ethereum’s Price Takes a Hit
This reduced network activity and lower fees have unfortunately coincided with a significant drop in Ethereum’s price. The price fell by about 45% in Q1 2025—its worst first-quarter performance since 2022. The ETH/BTC pair also hit a 5-year low. Despite this, large investors (“whales”) are buying up ETH below $1800, showing some confidence in the future.
What’s Next for Ethereum’s Price?
An analyst, MAC_D, has pointed out some key price levels to watch. The average cost basis for most Ethereum holders is around $2200, meaning many are currently underwater. However, whales holding massive amounts of ETH have an average cost basis of around $1290. MAC_D suggests this $1290 level is a crucial support level. If Ethereum falls below this, he believes it might find support around $870, a level that held during the Luna crisis in 2022.
