Ethereum (ETH) gas fees declined 93% on February 7 as the validators agreed to increase the gas limit per block. This change has caused transaction fees on Ethereum to be almost same as its competitor, Solana (SOL). Many speculate that this development could fuel Ethereum price to form a bottom and kickstart a reversal. Despite this fundamentally bullish development ETH dropped 2.40% yesterday and is down -0.48% today and trades around $2,613.
Why is Ethereum Price Crashing as Gas Fees Plummet More Than 90%?
Due to the high correlation with Bitcoin (BTC), Ethereum prices continue to drop despite the increase in gas limits on February 6, which dropped gas fees by more than 90%.
At the time of writing, the transaction fee on Solana costs $0.04, while Ethereum’s gas price hovers around $0.05. This achievement from Ethereum comes after validators agreed to raise the gas limits to nearly 32 million units. This upgrade to the network came without the need for a hard fork after almost half of the validators supported increasing the gas limits. In a nutshell, increasing gas limits allows more transactions to be bundled in a block. As a result, the gas fees have plummeted, which is a fundamentally bullish development and could inflate ETH’s value.
Many are touting this move as “solving the scaling problem” that plagued Ethereum for years. The fact that the gas fees are comparable to the competitor Solana makes it much more alluring. It could be a catalyst that ignites ETH to form a bottom formation and a bullish Ethereum price reversal.
Is ETH Forming a Bottom?
From a technical standpoint, Ethereum price is approaching the key support level at $2,497, which is the midpoint of the daily wick formed after the February 3 crash. So, yes, ETH is forming a bottom around $2,500, and the probability of a reversal is high. The Relative Strength Index (RSI) and Awesome Oscillator (AO) support this outlook as they flash signs of reversal. The RSI has hit the oversold zone after six months, and AO is flashing green histograms below the mean level, suggesting a depletion of bearish momentum and hinting at a resurgence of bullish momentum.
Key Levels to Book Profits
After a bounce from the key support level of $2,497, investors must pay close attention to $2,921 & $3,000, which are Monday’s high and 200-day Simple Moving Average (SMA). These levels could pose stiff resistance to the Ethereum price’s recovery rally. Overcoming these hurdles will open the path to critical overhead barriers at $3,119 and $3,306. Only after flipping these into a support floor will push ETH to $4,000 and beyond.
Conclusion
In conclusion, the significant drop in Ethereum gas fees by over 90% is a fundamentally bullish development that could potentially catalyze a bull run. Despite the current price drop, Ethereum is forming a bottom around $2,500, and technical indicators suggest a high probability of a reversal. As Ethereum’s gas fees become comparable to those of Solana, it may regain its attractiveness, leading to a potential price surge. Ethereum price prediction notes a move to $4,000 is possible after a bottom around $2,500.
Frequently Asked Questions (FAQs)
Yes, Ethereum price is forming a bottom around $2,500, as it approaches the key support level and technical indicators suggest a reversal.
Ethereum gas fees are dropping due to the increase in gas limits, which allows more transactions to be bundled in a block, resulting in lower fees.
Investors should watch $2,921, $3,000, $3,119, and $3,306 as key levels that could pose resistance to Ethereum’s price recovery rally.
Akash Girimath
Senior Cryptocurrency Analyst & Market Strategist
Engineer-turned-analyst Akash Girimath delivers data-driven insights on cryptocurrency markets, DeFi, and blockchain technology for platforms like AMBCrypto and FXStreet. Specializing in technical analysis, on-chain analytics, and risk management, he empowers institutional investors and retail traders to navigate market volatility and regulatory shifts.
A hands-on strategist, Akash merges active crypto portfolio management with research on Web3, NFTs, and tokenomics. At AMBCrypto, he led cross-functional teams to redesign content frameworks, achieving record-breaking traffic growth through scalable editorial strategies. His analyses dissect market sentiment, investment strategies, and price predictions, blending macroeconomic trends with real-world trading expertise.
Known for mentoring analysts and optimizing workflows for high-impact reporting, Akash’s work is cited across global crypto publications, reaching 500k+ monthly readers. Follow his insights on YouTube, X, and LinkedIn for cutting-edge perspectives on decentralized ecosystems and crypto innovation.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Source: https://coingape.com/markets/ethereum-price-crashes-as-gas-fees-drop-90-is-eth-bottom-in/
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