As the Ethereum [ETH] network expands, fresh data reveals an unsettling trend. Since the network’s recent merger, gas costs on the Ethereum network have progressively increased.
This increase in gas prices may stymie Ethereum growth by making the network unavailable to users who cannot afford the fees.
The rising cost of gas has had a direct influence on the number of active Ethereum addresses. As transaction costs rise, fewer users may be willing or able to participate in the network, resulting in a decrease of active addresses.
The cost of transactions varies based on the kind of transaction, with Ethereum NFT transactions having the highest gas pricing. This has contributed to a drop in interest in Ethereum NFTs, since the cost of issuing and trading these digital assets has risen.
Despite the obstacles caused by increased gas prices, the Ethereum network is showing signs of life. One of these is an increase in the velocity of ETH, which indicates that the frequency with which ETH is transferred between addresses has increased.
Simultaneously, the MVRV ratio fell, implying that most Ethereum investors would not earn a substantial profit if they sold their holdings now. This decreased sell pressure on Ethereum and made a price decline in the future less likely.
Furthermore, traders were growing more confident about Ethereum as long holdings on the network increased. According to Coinglass, over 52% of all Ethereum holdings were long. This showed that traders expected the price of ETH to grow further. This rising optimism, along with lower sell pressure, may lead to a more stable Ethereum market in the future.
Overall, rising gas prices on the Ethereum network are causing worry among holders.
While rising prices may limit network adoption, there are also signs of increasing optimism and stability in the network. Only time will tell whether these encouraging signs overcome the problems faced by increased gas costs.