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Ethereum gas fee plummets as NFT sales and DeFi activity on the platform are on a sharp decline over the last two months.
The world’s second-largest cryptocurrency Ethereum (ETH) has been under severe pressure recently. As of press time, ETH is struggling to hold above $1,000 levels.
Amid the bearish conditions, the Ethereum network gas fee has dropped to the lowest since 2020 to 0.0015 ETH or $1.57. The last time the ETH gas fee was this low was in December 2020. Last year, the ETH gas fee skyrocketed owing to a mega bull run.
Apart from the bull market run, the hype around non-fungible tokens (NFTs) and the craze in decentralized finance (DeFi) was responsible for the sharp surge in ETH gas fee. For nearly 18 months in the time period between January 2021 and May 2022, the average gas fee on the Ethereum blockchain stood at around $40.
On May 1, 2022, the Ethereum blockchain network recorded the highest gas cost at $196, as per data on BitInfoCharts. However, in the last 60 days, the gas fee has dropped drastically and is now under $1.57. So what actually led to this sudden debacle in ETH gas fee.
#ethereum finally usable again! pic.twitter.com/VFhTVR3joO
— Lark Davis (@TheCryptoLark) July 4, 2022
There could be multiple reasons for it. First, the crypto market has witnessed a brutal correction in the last two months. Major liquidations taking place might have led to a drop in the Ethereum address activity. On the other hand, the daily NFT sales have tanked to a one-year low.
In June last month, the NFT ecosystem recorded its worst performance of the year. The total number of daily NFT sales has dropped to roughly 19,000, having an estimated value of $13.8 million.
Will Ethereum (ETH) Sustain $1,000?
The world’s second-largest cryptocurrency Ethereum has been under intense selling pressure and has already touched a low of under $1,000 last month. Although ETH managed to recover later, it continues to remain under intense selling pressure.
As per industry experts, if the sell-off continues, ETH can see a low of $800 and below going ahead. On the other hand, as the ETH price continues to drop further, 80% of the ETH stakers are currently at loss. At the same time, only 17% of the ETH investors are in profit who might ETH at prices lower than the current price.
Ethereum staking on the Beacon Chain became public when ETH was trading at $600 back in December 2020. But throughout 2021, ETH continued to rally all the way up to $4,000 and above.
Recently, as the ETH price tanks, ETH miners have also been facing losses. ETH miner revenue for June 2022 dropped 40% to $550 million.