Ethereum (ETH) could soon see an explosive bull rally, according to analyst Ryan Lee. Despite the popular altcoin currently going through a rough patch, with its price still trading almost 50% below its all-time high of around $4,880, a breakout to a new all-time high could be closer than expected.
Lee points to the historically low transaction fees on the Ethereum network as a key signal of a potential bull rally that could push the ETH price significantly higher.
Layer-2 protocols ensure low ETH fees
Lee, a principal analyst at Bitget Research, notes that gas fees on the Ethereum network are currently extremely low. The last time transaction fees were this low was five years ago. Currently, gas fees have dropped to just 0.6 gwei, a sharp drop from the average of 83.1 gwei paid in March.
In general, transaction fees decrease when there is less competition to execute transactions, as the Ethereum network can only process a limited number of transactions per block. To make a transaction go faster, users typically have to pay higher fees to move to the front of the line.
While the low gas fees could indicate a decrease in activity on the Ethereum network, Lee sees it differently. He argues that the success of layer-2 protocols within the Ethereum ecosystem has taken over a large portion of transactions from the mainnet. This shows that their goal of enabling lower transaction fees has been achieved without sacrificing network utilization.
According to the analyst, the low fees could mean that the Ethereum price will soon rise significantly, especially as this coincides with potential rate cuts by the Federal Reserve in the coming months.
“Every time Ethereum gas fees hit a low, it often signals a mid-term price bottom,” Ryan Lee explained in a correspondence with CoinDesk. “After such a cycle, ETH prices typically recover strongly. If this recovery coincides with a cycle of rate cuts, the market presents a huge opportunity for further growth.”
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Source: https://newsbit.nl/crypto-analist-verwacht-grote-ethereum-koersstijging-dit-is-waarom/
