What can Ethereum’s [ETH] declining gas fees mean for the protocol? Analyzing…

• Ethereum’s gas fees reached a one-month low, inspiring renewed interest.
• NFT activity and validator numbers surge, but whales’ ETH concentration remained a concern.

The Ethereum [ETH] network, despite its popularity, has been known to drive away users due to the high gas fees required to make transactions on the network.

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Getting active

However, in recent days, gas fees on the network has dropped significantly, hitting a one-month low of 29.390 GWEI. This has renewed interest in Ethereum [ETH] from the crypto community, as evidenced by the spike in NFT activity on the network.

📉 #Ethereum $ETH Mean Gas Price (7d MA) just reached a 1-month low of 29.390 GWEI

Previous 1-month low of 29.403 GWEI was observed on 03 March 2023

View metric:https://t.co/lIfeeyqwEs pic.twitter.com/z5Jf5QK2Ms

— glassnode alerts (@glassnodealerts) March 20, 2023

Over the past 24 hours, there has been a total of $58 million worth of transactions in the Ethereum NFT market, with 71,700 trades conducted.

Most of this activity (around 70%) took place on the Blur platform, where the average trade amount was $1,206. The remaining 16% of the volume was on OpenSea, where the average trade amount was $335.

In the past day, the Ethereum NFT market saw $58M in volume, made in 71.7K trades.

70% of the volume occurred on Blur, seeing an average of $1,206 per trade, while %16 of the volume occurred on OpenSea with an average of $335 per trade.@DuneAnalytics dashboard by @hildobby_ pic.twitter.com/s6kQJukqe9

— NFTgators 🐊 (@NFTgators) March 20, 2023

The interest in Ethereum is not limited to users alone. Validators on the network have also shown an interest, with their numbers increasing by 6.22% over the past week. This increase in the validators has resulted in a 24.27% rise in revenue generated by them during this period.

Despite this, according to data provided by Dune Analytics, 55% of Ethereum stakers remained unprofitable at press time.

Source: Dune Analytics

ETH holders get gassed up

However, the same cannot be said for addresses holding ETH, as the high MVRV ratio suggests that most addresses on the network are profitable. The high profitability of the ETH addresses could incentivize new users to buy ETH going forward.

Realistic or not, here’s ETH market cap in BTC’s terms

On the other hand, the concentration of whales holding their ETH has increased materially over the last month.

Source: Santiment

This could make ETH vulnerable to large price fluctuations if these whales decide to sell. This could be one reason why short positions against ETH have increased tremendously over the last few days, according to data from Coinglass.

Source: Coinglass