Ethereum Gas Fee Crashes to Three-Month Low, ETH Price Recovers to $3,100 (2024)

Earlier today, amid news of the escalating geopolitical tensions and the Israel-Iran conflict, Bitcoin and the broader cryptocurrency market faced severe selling pressure. However, this dip once again met with a strong buying interest from investors. With the Ethereum price dropping to $2,877 earlier today, bulls are staging a strong recovery once again to $3,100.

Ethereum Gas Fee Drops to 3-Month Low

Recent data from on-chain analytics firm Santiment reveals a notable decrease in transaction costs on the Ethereum network. The cost of conducting a transaction on Ethereum has plummeted to $2.07, marking a significant reduction from the $15.21 recorded on March 4th during a period of heightened demand.

Analysts at Santiment suggest that transaction fees on the Ethereum network often reflect prevailing sentiments within the cryptocurrency market. During periods of extreme bullishness, characterized by the belief that crypto assets are poised for significant price increases (“To the Moon”), transaction fees tend to peak. Conversely, during phases of pessimism when sentiments lean towards the belief that cryptocurrency markets are in decline (“Crypto is Dead”), transaction fees typically revert to lower levels.

This pattern of transaction fees mirroring market sentiment underscores the cyclical nature of cryptocurrency markets. Peaks in transaction fees often coincide with price tops for Ethereum, while periods of low transaction costs are observed around price bottoms.

On the other hand, Ethereum Layer-1 competitors like Solana have witnessed a huge surge in DeFi activity along with the recent meme coin frenzy. This competition has also led to network decongestion on Ethereum thereby keeping the gas fee on the lower side.

ETH Price Action Ahead

Ethereum made another attempt at recovery but encountered resistance near the $3,100 mark, reminiscent of Bitcoin’s struggles. Despite stabilizing above $3,000 initially, a bearish sentiment prevailed, pushing the price below this support level to briefly dip below $2,900. The bottom was established at $2,867 before a rebound ensued.

Currently, Ethereum is in the process of recovering from its losses, having surpassed the 23.6% Fibonacci retracement level of the recent downward movement from $3,278 to $2,867. However, it continues to trade below $3,100 and the 100-hourly Simple Moving Average (SMA).

The immediate hurdle for Ethereum lies near the $3,020 level, followed by a significant resistance zone around $3,070, coinciding with both the 100-hourly SMA and a key bearish trend line forming on the hourly ETH/USD chart. Further resistance is anticipated around $3,120, aligned with the 50% Fibonacci retracement level. A successful breach above $3,120 could pave the way for a potential upswing towards the $3,200 mark.