Ethereum Gas Fees Skyrocket: What Does It Mean For Investors?
09 May 2023 - 8:09PM
NEWSBTC
Ethereum, the world’s second-largest cryptocurrency by market
capitalization, is currently facing a significant issue: soaring
gas fees. Gas fees, also known as transaction fees, are
payments made to miners on the Ethereum network for processing
transactions. These fees have been rising steadily over the past
few months, reaching record highs in recent days. The
situation has left traders and investors concerned about the
long-term viability of the Ethereum network, as high fees could
discourage users from utilizing the platform. Related
Reading: Shiba Inu: Whales Accumulate Yet Price Drops – What’s
Going On? High Gas Fees On Ethereum Network Despite Transition To
PoS Based on a recent report by crypto analytics provider
WhaleAlert, a single transaction on the Ethereum network cost a
trader approximately $118,600 in fees, which translates to 64
ETH. 💸 A fee of 64 #ETH (119,121 USD) has just been paid for
a single transaction!https://t.co/3w4UD0AZbw — Whale Alert
(@whale_alert) May 8, 2023 While high gas fees are not a new
phenomenon on Ethereum, they have become relatively rare since the
network’s transition from the proof-of-work (PoW) to the
proof-of-stake (PoS) protocol through The Merge. This shift
was expected to reduce congestion on the network, but the current
high gas fees suggest otherwise. Possible Cause: Meme Coin Hype,
Network Congestion The recent spike in network activity is said to
be a result of the meme coin craze, which has created intense
network activity, causing congestion during the weekend. This
activity reached its peak when Binance, a popular crypto exchange,
listed PEPE tokens and Floki Inu for trading on its platform.
The resultant congestion, coupled with panic selling by whales, has
contributed to the soaring prices and may eventually lead to
reduced gains for retail traders. Impact On Ethereum Prices Despite
a 0.5% dip in the last 24 hours, Ethereum has maintained a steady
seven-day rally of 0.5%, with its current price at $1,842.37
according to CoinGecko. However, high gas fees on the network may
negatively affect Ethereum’s long-term prospects and discourage
users from utilizing the platform. The high gas fees on the
Ethereum network could have a significant impact on ETH prices in
the long run. If the network congestion persists, users may start
looking for alternatives to Ethereum, leading to reduced demand for
the cryptocurrency. This could eventually result in lower prices,
affecting investor sentiment and leading to a market sell-off.
ETHUSD loses grip on the $1,900 handle. Chart: TradingView.com
Related Reading: PEPE Token Futures Cast Gloom For Investors As
Prices Plummet By 45% Moreover, the current high gas fees may also
hinder the growth of decentralized finance (DeFi) applications on
Ethereum. DeFi protocols heavily rely on the Ethereum network to
execute transactions and provide liquidity, and high gas fees could
limit their growth and adoption. This, in turn, could affect the
overall demand for ETH and its price. -Featured image from Freepik
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