Ethereum Sees Growing Bullish Momentum Following Rise in Transaction Fees and Burnt ETH

Ethereum (ETH) is experiencing increased bullish momentum, thanks to a 498% rise in transaction fees over the past ten days. This surge comes amid heightened on-chain activity and has resulted in more ETH being burnt, signaling a potential uptrend in the market.

Why Ethereum Transaction Fees Are Surging

Recently, Ethereum transaction fees have spiked to a seven-week high due to increased on-chain activity. As noted by analysts at Coinbase, decentralized exchange (DEX) and ETH transfer volumes have risen by 7% and 19%, respectively, over the past week. This uptick in activity has led to a significant jump in transaction fees.

David Duong and David Han, analysts from Coinbase, revealed that the average gas price from September 16 – 26 rose by 498%, compared to the preceding 30-day average. As of now, the median transaction cost on the Ethereum network is $1.69, up from $0.09 at the start of the month.

Impact of Burnt ETH on Bullish Momentum

The increase in transaction fees has also led to a substantial rise in the total ETH burnt daily. According to CryptoQuant’s data, the burnt ETH surged over 900% to 2,097 ETH. This trend creates deflationary pressure on the Ethereum supply, contributing to a potential bullish outlook among investors.

Ethereum ETFs and Market Movements

Recently, Ethereum ETFs reported net outflows of $0.1 million, marking their lowest outflow day since launch. While BlackRock’s ETHA and Fidelity’s FETH witnessed inflows of $15.3 million and $15.9 million, respectively, Grayscale’s ETHE saw outflows of $36 million after two days of no flows. This mixed activity indicates varying investor sentiment but also suggests possible room for growth.

Potential for a Massive Rally

Trading around $2,690, Ethereum has seen a 2.2% gain recently. Coinglass data reports liquidations worth $18.85 million in the past 24 hours, with long and short liquidations comprising $6.66 million and $12.19 million, respectively. Notably, Ethereum’s sustained trading above a key descending trendline since June suggests the potential for a significant rally in the coming months. Past behavior from August to November 2022 and July to October 2023 supports this possibility, given previous rallies of 94% and 164%.

Short-term, Ethereum is striving to hold above a resistance level around $2,707. Successfully reclaiming the $2,817 mark could signal further upward momentum. The Relative Strength Index (RSI) and Awesome Oscillator (AO) both show readings above neutral levels, with the AO displaying consecutive green bars—indicators of ongoing bullish sentiment.

Post-Merge: What’s Next for Ethereum?

The Ethereum community is eagerly awaiting the Sharding upgrade, set for later in the year. This upgrade will enhance scalability and reduce transaction fees by improving data storage efficiency. In tandem, the network’s capacity will increase, benefiting all services running on Ethereum.

Forks in the Ethereum blockchain occur after consensus on upgrades is reached, resulting in either temporary (soft forks) or permanent (hard forks) splittings. EIP-4844, also known as “proto-Danksharding,” promises to significantly reduce gas fees while increasing transaction speeds, making it highly beneficial for the network.

Additionally, Gas tokens allow users to tokenize gas on the Ethereum network, offering a cost-effective way to manage transactions. This innovation aids in mitigating high gas prices, providing opportunities for arbitrage and early investments in ICOs.

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