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The data in the chain shows that the Ethereum transaction rate has fallen to the lowest level in recent years. This is what this could mean for the price of ETH.
Ethereum average rates now valued at just $ 0.168
In a new Insight publication, the Santimento chain analysis firm has discussed the latest trend in Ethereum average rates. The “average rates” is a metric that, as its name suggests, monitors the average amount of rates that the senders in the ETH network are connecting with their transactions.
The value of this indicator is correlated directly with the amount of traffic that the block chain is treating. The reason behind this lies in the fact that the network only has a limited capacity to handle transfers.
When the chain is busy, transfers can remain stuck in the waiting until transactions ahead are clarified. Those who want their transactions to be processed as soon as possible can choose to attach a larger rate than the average, so that the validators prioritize them.
In especially high traffic times, this type of competition among users can quickly carry the average rates to significant levels. However, when there is little activity, the senders have few incentives to pay any remarkable amount of rates, so the value of the metric can remain low.
It seems that Ethereum has witnessed this last type of conditions recently, since the average rates have registered a fall.
Looks like the value of the metric has declined to a low level in recent days | Source: Santiment
As shown in the previous graph, Ethereum’s average rates have fallen to a minimum of $ 0.168 recently, which is the lowest that has been since 2020. This means that the network activity is historically low at this time.
According to the analysis firm, this may not be so bad from a commercial perspective, since periods of low rate can often precede rebounds in the price of cryptocurrency.
Below is a graph that shows an example of this trend in action:
The past trend in the transaction fees of ETH | Source: Santiment
As is visible in the previous graph, Ethereum’s average rates that fell under the $ 1 mark in 2023 led to an uphill impulse for the asset. The explanation behind this pattern may be in the fact that low rate periods may indicate the disinterest of the crowd.
Historically, ETH and other digital assets have tended to move in a way that achieves the expectation of the majority. This means that lack of optimism can lead to rebounds, while excessive hype can lead to tops. From the painting, it is evident that the upper part of the first quarter of ETH 2024 arrived when the metric exceeded $ 15, indicating a large amount of emotion.
“In general, rates levels below $ 1 are a fairly promising sign that the crowd has selfless,” says the analysis firm. “Just remember that there is no” lower “or” upper “level, guaranteed every time the costs of the time rate are underneath or above a certain level.”
Eth price
At the time of writing, Ethereum quotes around $ 1,600, more than 1% in the last 24 hours.
Looks like the price of the asset hasn't moved much recently | Source: ETHUSDT on TradingView
Outstanding image of Dall-E, Santiment.net, TrainingView.com graphics
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