Surge in Bitcoin Price Leads to Increased Demand – Implications for Investors
The Ethereum blockchain, renowned for its smart contract capabilities, is currently experiencing a surge in on-chain operations. This uptrend is fueling a rise in transaction costs, particularly as more traders utilize decentralized finance (DeFi) platforms leveraging Ethereum’s network.
ETH has been following an upward trajectory, reflecting the broader crypto market sentiment in anticipation of a bullish final quarter.
Amidst Ethereum’s growing popularity and escalating transaction volumes, the surging fees are raising concerns, especially with the escalating participation of traders.
Escalating Active Addresses
One crucial on-chain parameter contributing to the escalating fees is the scrutiny of Ethereum addresses. Daily active addresses are surging, observing a 29% uptick, while new addresses have increased by 43%.
Even zero-balance addresses have shown a 28% surge, but active addresses persist at peak levels, indicating heightened network activity with an increased number of simultaneous transactions taking place.
The network’s increased activity complicates transaction verification, subsequently propelling transaction fees upwards.
Upsurge in DEX Volumes
Another factor fueling the spike in Ethereum transaction fees is the surge in decentralized exchange (DEX) volumes. The total ETH trading volume on DEXs over the past 24 hours amounted to $978 million, with the weekly volume reaching $8.38 billion, marking a 2.13% rise.
The monthly volume figures also suggest a consistent uptrend in ETH trading across DEXs. As decentralized exchanges hold a significant role in Ethereum’s network activity, their expansion leads to increased congestion, subsequently inflating transaction expenses.
ETH Staking Patterns
Furthermore, alterations in ETH staking flows are also contributing to the heightened fees. In the bear market phase, outflows dominated the staking landscape, mirroring the decreasing ETH prices.
However, a shift has transpired, with outflows now balancing inflows, indicating a revived interest in staking. This spike in staking operations results in a higher number of transactions on the Ethereum network, intensifying strain and pushing transaction fees upwards.
The overall staked ETH has now rebounded to its peak levels post a sharp decline during the former market crash. Increased participation in staking activity intensifies network congestion, further elevating costs.
The current price trajectory of Ethereum, alongside escalating transaction fees, reflects the enhanced activity on the network. Key on-chain metrics like active addresses, DEX volumes, and ETH staking all contribute to the recent price fluctuations and fee hikes.
As the broader crypto market prepares for a potential upsurge in the final quarter, Ethereum might witness continued price increments, albeit users grappling with rising fees.