Ethereum Gas Fees Hit All-Time Lows in 2024: Is It the Best Time to Transact?

• The cost of transferring ether has dropped to as low as 2.6 Gwei as of mid-2024, thus lowering the overall transaction fees.
• New network improvements and decreased overall transaction rate are the main reasons for lower Ethereum gas fees and cheaper transactions.
• Currently, only 9.8% of the Ethereum supply is held at centralized exchanges, which may point towards a possible supply-side shock and, therefore, a bullish market sentiment.

The cost of sending transactions on the Ethereum network has slashed to its lowest in mid-2024, opening up more room for cheaper transfers. Glassnode data reveals that the average gas price has declined to 2.6Gwei, a figure that has not been witnessed in the past.

This means that the transmission of Ethereum-based transactions at the standard speed costs up to $0.28. A year ago, the average gas price was over 16 Gwei, which means significantly higher transaction fees.

Regarding these prognoses, Leon Waidmann, the Head of Research at the Onchain Foundation, has shared his viewpoint. He thinks that a reduction in supply held by exchanges may cause a “supply shock” that could positively affect the future of Ethereum’s prices. Waidmann also adds that the last significant exchange outflow of Ethereum was in March of 2024 when many investors were eager to cash in at the current all-time high price

Factors Behind Low Gas Fee

Several reasons contributed to the decline in Ethereum gas fees. First of all, recent advances in network upgrades have been critical in bringing about cost savings. Such enhancements have enabled Ethereum to handle more transactions at a lower cost than the previous network state. Moreover, there has been a significant reduction in the number of transactions on Ethereum’s Layer 1, reducing traffic and fees.

Another trend is the distinguished reduction in Ether tokens stored on centralized platforms. Thus, as of the end of August 2024, only 9.75% of the total Ethereum supply will be held on such platforms. This number is the lowest in the asset’s history and could be an early sign of change in consumer behavior. This is usually considered a bullish midterm indicator as more Ethereum holders keep their tokens off exchanges.