Ethereum Transaction Fees Hit Five-Month Low Amid Market Challenges

Ethereum Transaction Fees Hit Five-Month Low Amid Market Challenges

Ethereum’s daily transaction fees have plummeted to their lowest level since September 2024, signaling a decline in network activity. According to data from Token Terminal, Ethereum generated $731,472 in fees on February 8, marking the first time in five months that daily revenue has dipped below the $1 million threshold. The last similar downturn occurred between August 17 and September 8, 2024, when the network consistently failed to surpass $1 million in daily fees. Before that, such a slump hadn’t been seen since November 2020.

Ether Struggles Despite Spot ETF Approvals

Ethereum’s native cryptocurrency, Ether (ETH), has struggled to keep pace with Bitcoin’s rally over the past year, even after major financial markets—including the U.S. and Hong Kong—approved spot ETFs. Unlike Bitcoin, which has reached new highs, ETH’s price has remained stagnant, leaving investors disappointed.

A significant factor weighing on Ethereum performance is its increasing supply. Since April 2024, Ethereum’s total supply has been steadily rising, reversing the deflationary trend introduced by the Merge in September 2022. The Merge transitioned Ethereum from a proof-of-work (PoW) to a proof-of-stake (PoS) model, eliminating mining-based issuance and reducing supply inflation.

However, with network activity declining, the impact of Ethereum’s London hard fork—which introduced a burn mechanism for transaction fees—has diminished. When network usage is high, more ETH is burned than issued, making the asset deflationary. But with lower activity levels, Ethereum’s supply has now surpassed pre-Merge levels, fueling inflation concerns.

Layer-2 Scaling Solutions Shift Activity Away from Ethereum

Ethereum’s strategy of layer-2 scaling has successfully reduced congestion and lowered transaction fees, but this has also moved significant activity off the main blockchain. While these solutions provide efficiency, they struggle with interoperability, raising concerns about Ethereum’s ecosystem becoming increasingly fragmented.

Meanwhile, competitors are capitalizing on Ethereum’s weaknesses.

• Tron has gained traction as the go-to network for stablecoin transactions.
• Solana has emerged as a major DeFi and memecoin hub, drawing liquidity away from Ethereum.

Both Tron and Solana have outpaced Ethereum in total fees generated over the past three months, according to Token Terminal.

Internal Conflicts Add to Uncertainty

Beyond technical and market-related factors, Ethereum is also facing internal leadership turmoil. In January 2025, co-founder Vitalik Buterin took sole control of the Ethereum Foundation, following criticism of executive director Aya Miyaguchi and concerns over potential conflicts of interest among Ethereum researchers linked to EigenLayer.

Despite these uncertainties, Ethereum bulls remain undeterred. On February 7, accumulation addresses scooped up 330,705 ETH—valued at approximately $833 million—marking the largest single-day inflow ever recorded, according to CryptoQuant.

While Ethereum faces mounting challenges, strong accumulation suggests that long-term investors still see value in the network. Whether this confidence translates into a market rebound remains to be seen.