Ethereum: Low gas fees point to next altcoin season

Ethereum's on-chain fees (gas fees) recently reached a six-month low. This could be an indication of an upcoming altcoin bullrun, according to analysis platform Santiment.

According to the platform, transaction fees on the most popular smart contracts blockchain are a good indicator of market participants' sentiment. Gas fees are therefore high on local price spikes, but fall sharply on local lows.

The current radio silence on the Ethereum chain could therefore be accompanied by a bottoming out in the charts of many crypto prices. In previous bull markets, this was often followed by a reversal, as Santiment suggests.

"With the markets' dominant decline over the past six weeks, the lack of network demand and utilization could contribute to a turnaround in ETH and related altcoins sooner than expected," analysts said.

The first signs of this movement can be seen in crypto's weak start to the week. Bitcoin, for example, lost about six percent during the week, while Ethereum remained roughly flat over the same period.

In previous market cycles, Bitcoin's decline in dominance and Ethereum's strengthening were signs of an impending rally for altcoins. The fact that two of Bitcoin's strongest story lines, halving and ETFs, have ticked off reinforces this theory.

However, the crypto market has recently faced macroeconomic backlash in the form of persistently high interest rates and a short-lived rise in US inflation.

Therefore, whether the altcoin rally can take place under these conditions remains uncertain.