Ethereum gas fees hit record lows as ETH attempts historic price move

• Ethereum gas fees fell to an all-time low on Saturday as the supply of ETH continued its upward trend.
• Global Ethereum ETFs saw minor inflows of $4.2 million last week, despite their US counterparts seeing outflows of over $14 million.
• Ethereum could repeat the historical move after breaching the lower trendline of a key ascending triangle.

Ethereum fell more than 3% on Monday after seeing weak flows in ETH ETFs and a record low in gas taxes last week. The decline also coincides with ETH attempting to repeat a historic price move it has experienced over the past two years.

Daily Market Reasons: Low Ethereum Gas Fees Coincides With Weak ETF Flows

Over the past week, Ethereum’s average daily gas fee hit an all-time low of 1.06 Gwei on Saturday, according to data from Ultrasound.money. Gwei is the measure for transaction fees on Ethereum.

London Hard Fork ETH Gas Fees

The reduction in gas fees also meant that the ETH burn rate dropped to 115 ETH on Saturday, according to CryptoQuant data. While periods of record gas taxes have often coincided with low prices in the past, the market outlook this time may be different due to the March 13 Dencun upgrade.

The Dencun upgrade introduced blobs, which allow layer 2 networks to post data to the main chain at significantly lower fees. As a result, the burn rate of ETH – meant to offset new issues – continued to decline.

Between April and August 2024, the total supply of Ethereum increased by more than 220,000 ETH and its price fell by more than 30%. A sustained upward trend in supply could have a negative impact on the price of ETH if demand falls or remains flat. This may be a potential reason why Ethereum ETFs are not yet affecting prices.

Meanwhile, Ethereum ETFs saw a net inflow of $4.2 million last week, according to CoinShares data. While global inflows were positive, US spot ETH ETFs posted net outflows of $14.1 million. Weak flows indicate caution among investors, as evident in choppy price action and the ETH Fear and Greed index at 34.

The ETH Fear and Greed Index measures investor sentiment towards Ethereum using values ​​from 0 to 100. A high increase in the index suggests high greed, while decreasing values ​​suggest FUD (Fear, Uncertainty and Doubt).

ETH Technical Analysis: Ethereum is poised to repeat the historical movement of key prices

Ethereum is trading around $2,570 on Monday, down more than 3% on the day. Over the past 24 hours, ETH has supported $30.8 million in liquidations, with long and short liquidations accounting for $28 million and $2.8 million, respectively.

The Ethereum derivatives market indicates that most traders are bearish as funding rates turned negative earlier today, according to CryptoQuant data. Funding rates are periodic payments that long/short traders pay/receive when the perpetual futures price trades above or below its spot counterpart. It is also used as a kind of sentiment indicator to know whether traders are bullish or bearish.

Ethereum’s funding rate is around -0.0036 at the time of writing, indicating that short positions are dominant.

Bearish sentiment is also evident on the 4-hour chart, where ETH breached the lower ascending trend line of an ascending triangle on Sunday. Such a move indicates that sellers are gaining momentum and could trigger a dominant bear trend.

ETH/USDT 4 Hour Chart

However, the stochastic oscillator in this time frame suggests that ETH could see a rebound after breaking below the 20 level and entering the oversold region. On the other hand, the Relative Strength Index (RSI) signals a bearish move after moving below its midpoint and moving average.

Meanwhile, ETH continues to face resistance around a downtrend line on the daily chart. The trendline, drawn between May 30 and September 29, suggests that ETH could drop to the $2,000-$2,200 range in the coming weeks before seeing a major rally.

ETH/USDT Daily Chart

ETH posted similar moves from August 2022 to November 2022 and from July 2023 to October 2023. Additionally, the Awesome Oscillator (AO) on the daily chart suggests bearish momentum is fading.

In the short term, ETH could briefly rise to $2,648 to liquidate $21.12M worth of positions.