Ethereum Gas Fees Soar 314%! But Why Are Users Vanishing Amidst the Surge?

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Ethereum, the second-largest cryptocurrency by market cap, has recently seen a sharp rise in its transaction fees. As noted by crypto analyst Kyledoops, these fees have jumped by an astonishing 314%. At the same time, the number of active Ethereum accounts has dropped to its lowest point this year, highlighting a surprising trend amidst the growing costs of the network.

Ethereum’s Transaction Fees Skyrocket

According to Kyledoops Ethereum’s seven-day average transaction fees have soared to $3.52, marking a sharp 314% increase from just $0.85 at the start of September.

However, the recent spike in Ethereum transaction fees is mainly due to the high gas consumption by specific smart contracts or network congestion. Additionally, transfers of Ether and transactions involving stablecoins like Tether (USDT) and USD Coin (USDC) have played a big role in driving up fees.

With such a dramatic jump in costs, users are now paying significantly more to complete transactions on the blockchain.

Increase in Ethereum Burn Rates

Alongside this spike in fees, Ethereum’s daily ETH burning has also seen a massive rise. On September 21, Ethereum’s daily burn rate reached an incredible 1,360 tokens, representing a 1,600% surge from just 80.27 tokens earlier in the month. 

The Ethereum burning mechanism, which was introduced with the EIP-1559 upgrade, is designed to reduce the supply of ETH by burning a portion of the transaction fees, making the asset more scarce over time.

Active Ethereum Accounts Hit Yearly Low

Despite the rise in fees and burn rates, Ethereum’s active accounts have dropped to around 385,000, marking a yearly low. This decline may reflect user frustration over high fees, pushing smaller users away from the platform, or if the decrease is part of a larger trend within the crypto market.

Perhaps, it remains to be seen how Ethereum will address these issues moving forward, especially as competitors like Solana and Avalanche offer lower-fee alternatives.

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Ethereum Price Jumps Over 14%

Ethereum has taken off recently, rising more than 14% in the last 7 days and breaking above the $2,500 mark. Currently, it trading around $2,645 and is above the 100-hour Simple Moving Average. There’s also a strong support line forming at $2,550 on the hourly chart.

As it climbs, Ethereum is facing some challenges near $2,650, which is a key level from the recent drop. The first major resistance is around $2,680, while the next important level is near $2,720.