Ethereum Transaction Fees Drop 98% Since March 2024 Peak

Ethereum transaction fees have reached their lowest levels since February 2020, with the seven-day moving average indicating transaction fees of less than $500,000 per day. This is a stark contrast to the peak of $30 million in March 2024. Despite this drop, the number of daily transactions on the Ethereum blockchain remains stable at about 1.2 million per day, indicating a shift in network economics rather than a decrease in demand.

The decline in fees can be attributed to several upgrades, including the introduction of EIP-4844, which added BLOB (big data) transactions, a cheaper way to store data for Layer 2 solutions. Additionally, the Base blockchain has become a popular choice among users due to its significant cost reduction while maintaining Ethereum's security. As of April 6, 2025, total transaction fees were 317.1 ETH, the lowest value since February 22, 2020, when the previous low was recorded at 306.2 ETH.

For users, lower transaction fees mean increased accessibility, opening up opportunities for small DeFi transactions and daily transfers. However, for validators, this reduction in fees decreases their motivation, as the blockchain increasingly relies on Ethereum issuance instead of fee income. This trend is also reflected in the record lows seen in the amount of assets burned due to transaction fees, a decrease in the number of new addresses on the blockchain, and a reduction in the available supply of Ethereum on centralized exchanges.

On May 7, 2025, the Ethereum blockchain is set to undergo a Pectra update, aimed at improving the user experience and efficiency of the network. This update comes at a time when the Ethereum ecosystem is facing challenges due to the significant drop in transaction fees and the shift in transaction activity to Layer 2 solutions. The decline in transaction fees has contributed to a reduction in network activity, with fewer active addresses and lower overall transaction volumes, leading to a weakening price performance for Ethereum.

The current bearish trend in the market has been exacerbated by regulatory updates and a lack of institutional investments. Key investors are holding back, leading to weak momentum for Ethereum in the short run. Analysts have pointed out that unless there is a revival in active addresses and transaction fees, the price of Ethereum may continue to decline. The Dencun upgrade, while intended to lower fees, has inadvertently contributed to Ethereum's inflationary status, further complicating the network's challenges.

Despite these challenges, there are signs of optimism. Ethereum whales have been accumulating aggressively, with wallets holding between 10,000 and 100,000 ETH increasing their stakes at the highest rate on record since February 2025. This accumulation suggests that some investors see value in Ethereum at its current price levels. Analysts have highlighted that the market price of ETH makes it undervalued at present, pointing towards a possible bullish reversal in the coming months.

The Ethereum market price analysis remains a topic of debate among experts. Some believe that the current downward trend could continue, with ETH testing lower support levels before a significant uptrend. Others, however, remain hopeful that network activity will pick up, leading to new all-time highs later this year. The next few months will be crucial in determining the direction of Ethereum's market trends and its next significant move. As Q2 2025 approaches, the question remains whether the Ethereum market will experience a recovery or continue to face bearish sentiment.