Ethereum Gas Fees Jump 314%: Will Users Leave the Network?

Ethereum, the second-largest cryptocurrency by market cap, is experiencing a dramatic increase in transaction fees, soaring by an astonishing 314%. Crypto analyst Kyledoops highlights this trend, noting that while fees are on the rise, the number of active Ethereum accounts has plummeted to its lowest level this year. This surprising dynamic raises questions about the network’s future amid escalating costs.

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Ethereum’s Transaction Fees Skyrocket

According to Kyledoops, Ethereum’s seven-day average transaction fees have surged to $3.52, up from just $0.85 at the beginning of September.

However, the recent spike in Ethereum transaction fees is mainly due to the high gas consumption by specific smart contracts or network congestion. Additionally, transfers of Ether and transactions involving stablecoins like Tether (USDT) and USD Coin (USDC) have played a big role in driving up fees.

Consequently, users are now paying considerably more to complete transactions on the Ethereum blockchain.

Increase in Ethereum Burn Rates

Alongside this spike in fees, Ethereum’s daily ETH burning has also seen a massive rise. On September 21, Ethereum’s daily burn rate reached an incredible 1,360 tokens, representing a 1,600% surge from just 80.27 tokens earlier in the month. 

The Ethereum burning mechanism, which was introduced with the EIP-1559 upgrade, is designed to reduce the supply of ETH by burning a portion of the transaction fees, making the asset more scarce over time.

Active Ethereum Accounts Hit Yearly Low

Despite the rise in fees and burn rates, Ethereum’s active accounts have dropped to around 385,000, marking a yearly low. This decline may reflect user frustration over high fees, pushing smaller users away from the platform, or if the decrease is part of a larger trend within the crypto market.

Perhaps, it remains to be seen how Ethereum will address these issues moving forward, especially as competitors like Solana and Avalanche offer lower-fee alternatives.

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Ethereum Price Performance

Ethereum has taken off recently, rising more than 14% in the last 7 days and breaking above the $2,500 mark. Currently, it trading around $2,645 and is above the 100-hour Simple Moving Average. There’s also a strong support line forming at $2,550 on the hourly chart.

However, as Ethereum climbs, it faces significant challenges near the $2,650 mark, a key level from its recent drop. The first major resistance level lies around $2,680, with another critical threshold near $2,720.

With Ethereum’s fees surging and active accounts declining, is it time for a change? Let us know your thoughts.