Ethereum Network Activity Surges 20% as Gas Fees Drop 98%

Ethereum's network activity has surged, with daily transactions nearing 2021 highs. This increase in network traction is attributed to several factors, including the ongoing ETH treasury frenzy, stablecoin narratives, and tokenized stocks. Notably, the recent scaling upgrades, such as Pectra, have played a significant role in this growth. Ethereum developer Arjun Bhuptani highlighted that the uptick in network activity is directly linked to these upgrades, which have resulted in lower gas fees, currently standing at 5-6 gwei compared to over 300 gwei during the 2021 peak.

Fundstrat’s Tom Lee viewed this network traction as a positive indicator for ETH’s value, stating that the increasing usefulness of Ethereum is beneficial for its price. Lee, who recently joined Bitcoin mining firm BitMine Immersion Technologies, believes that stablecoins are a significant narrative in the crypto space and could boost ETH. The market buzz is also evident on-chain, with Ethereum's stablecoin market cap and weekly engagement reaching record levels. Speculators have also shown increased bullish conviction, with top traders boosting their long positions from 52% to 64% in July.

Despite the positive on-chain indicators, ETH faced rejection at $2,600 after jumping from $2,300 earlier in the week. At the time of writing, ETH was valued at $2,520. However, the demand for ETH ETFs has lagged behind spot BTC ETFs, with spot ETH ETFs attracting over $4 billion in cumulative inflows compared to over $30 billion for BTC ETFs. This divergence is attributed to a lack of a clear narrative for ETH, as noted by analytics firm Ecoinmetrics. The firm stated that Bitcoin has a clear narrative, while Ethereum does not, leading to weaker reactions from ETH during periods of accelerated Bitcoin flows.

Ethereum's renewed market interest is evident on-chain as traders show increased activity. However, institutional demand for ETH still lags behind that of BTC. The current network activity and lower gas fees suggest that ETH prices may follow suit, potentially leading to a breakout in the near term. Technical analysis by crypto analyst Titan of Crypto indicates that ETH could be poised for a breakout from a broadening wedge pattern on the weekly chart, with a potential upside target of $4,200. However, ETH must maintain support above the $2,200 level to avoid a potential drop to as low as $1,160. At the time of writing, ETH is trading at $2,593, up 1.7% in the past 24 hours.