As cryptocurrency has continued its meteoric rise, Ethereum has long been considered the go-to network. Recently however, due to significant shifts, its transaction costs have significantly declined; reaching their lowest level since 2014. This indicates a major change in network dynamics.
Historic Drop in Transaction Fees
Ethereum is currently experiencing the unpredictable nature of crypto markets first-hand with a sharp decrease in network transaction fees, previously an obstacle to many users due to cost considerations. This change marks a new era of reduced activity on Ethereum blockchain.
Affiliated reports reveal that Ethereum network space demand has declined significantly, leading to lower transaction fees and signalling a reduction in ecosystem momentum. Data also shows that transaction fees have reached their four-year low since 2020; suggesting less congestion on-chain. This trend may have significant ramifications for user engagement, DeFi operations, NFT transactions as well as validators that depend on it – particularly validators dependent on blockchain validation services.
Market intelligence revealed a 60% decline in fees over the early months of 2025, dropping to $208 million by early April. This decline can be partially attributed to advancement of Layer-2 solutions such as Base, as well as Dencun update which significantly decreased cost for scaling layers. Base led this wave with 80 Transactions Per Second (TPS), solidifying its place within ecosystem.
Ethereum’s market value witnessed an enormous drop during this period of reduced network demand, falling by approximately 44% year-on-year during Q1 2025 – its most severe Q1 decline since 2022.
Future Outlook for Ethereum’s Price
An on-chain analyst identified critical support levels for Ethereum due to market’s volatility, noting that most holders are currently losing with average cost bases at $2,200 and whales holding substantial amounts sitting around $1.290 as major support levels. If prices were to fall further it is speculated they wouldn’t drop beyond $870 as indicated during Luna Crisis mid-2022 and indicate potential rebound.
