Ethereum (ETH) has seen a significant increase in its on-chain transaction fees. Ethereum’s gas fees have flipped a level last seen in April 2024. As per a post by IntoTheBlock on X, DeFi activity is responsible for this significant spike in gas fees.
Key drivers behind Ethereum fee increase
Ethereum’s weekly gas fees reached $67 million, representing a 17.9% increase. Despite the spike, this signals increased activity on the Ethereum blockchain. The update attributes this to an uptick in usage among decentralized finance platforms.
Additionally, most altcoins experienced a huge drop in price when Bitcoin (BTC) dropped below the historic milestone of $100,000. However, with BTC rebounding just before the week’s trading session slows, some altcoins are rebalancing in the broader cryptocurrency market.
Weekly Ethereum fees hit their highest levels since April, driven by significant DeFi activity and rebalancing in response to this week’s $100K market retracement. pic.twitter.com/OX8bFLHS1r
— IntoTheBlock (@intotheblock) December 13, 2024
This development has led traders and institutional investors to adjust their portfolios and contribute to the fee surge.
Meanwhile, ETH’s price only increased slightly by 0.7%. This suggests that market participants remain cautiously hopeful despite the price retracement and increased activity levels.
As of this writing, ETH is trading at $3,919.47, down by 1.42%. Nevertheless, many expect Ethereum to resume its journey to the $4,000 price level, like Bitcoin.
High fees amid profit opportunities
Another notable indicator from the post is the decrease in exchange flows. Ethereum’s exchange flow plunged by $778 million, reflecting the net outflows from trading platforms. This might show that some investors withdrew ETH to personal wallets. If so, it signals long-term confidence in Ethereum’s future price potential.
However, net flows increased by $42 million compared with the previous metric. This slight increase was triggered by short-term selling pressure or traders and investors reacting to market volatility.
Despite the market retracement, activity on Ethereum remains positive, as shown by the high gas fees and movement of funds. This indicates that these traders have decided to shun the high transaction costs and focus on the profit-taking that the market presents.
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