Ethereum transaction fees have dropped to a 6-month low, which could be a sign of a shift in market sentiment.
The price of Ethereum has also slightly increased against Bitcoin, showing that an altcoin season may be incoming.
Historically, low fees on Ethereum come before bull runs in the crypto market.
Moreover, Layer-2 scaling solutions for Ethereum are also surging.
Analyst, Moustache believes a significant altcoin season, similar to 2017, could be incoming
Ever since Bitcoin hit its all-time high of around $73,800 in mid-march and started to decline, there have been calls for an "alt season", led by Ethereum.
However, at the time of writing, we may be seeing the first few concrete signs that an altcoin season is indeed coming.
According to data from Santiment as of late April, the Ethereum network has experienced a significant drop in transaction fees, to a six-month low of around $1.12.
This decline in transaction fees doesn’t seem like much. However, Santiment mentions that it is one of the first few signs of massive things to come.
More interesting is how while these fees dropped, the price of Ethereum has advanced slightly against Bitcoin over the last week, indicating a “decoupling” of some sort.
According to this tweet from Santiment, historically speaking, when traders start to move from extreme optimism to extreme pessimism about the prices of certain cryptocurrencies, these sentiments often take a toll on transaction fees.
Santiment noted that these fees tend to peak when the optimism is at its highest, and then decline to their lowest when traders are at the most pessimistic.
This is the best point to buy because according to Santiment, the dipping fees might be one of the first few indicators of a "resting state” for the market, right before the alt season hits.
Fees on Ethereum are dropping
Keep in mind that earlier this year between February and March (when Bitcoin made its new all-time high), Ethereum's gas fees hit an eight-month high, right on the back of the new ERC404 standard, and the Dencun upgrade on 13 March.
The declining fees now may just be laying the groundwork for a comeback on Ethereum's network activity, and therefore its price.
If Ethereum starts to surge without Bitcoin, its dominance increases, triggering surges in the rest of the altcoins as well.
The decreasing fees and increasing price of Ethereum aren’t the only signs.
According to data from CoinMarketCap, Ethereum L2 solutions are also enjoying some of this surge in price, with some like Optimism, Arbitrum, and Polygon turning up as some of the best performers in the last week.
The surge in Ethereum’s circulating supply
Moreover, the reduced fees have also, somehow, triggered an increase in Ethereum’s circulating supply, as shown by the chart from YCharts above.
According to analysts from all over Twitter, we might be at the cusp of one of the biggest alt seasons since 2017.
This sentiment comes from the performance of USDT in the USDT.Dominance chart, which currently trades underneath a descending trendline as shown below:
The USDT dominance chart
Again, historically speaking, altcoins typically start right around when USDT’s dominance is at its most bearish.
Analyst, Moustache drew attention to this in a recent tweet, when he said “When USDT.D goes down, Altcoins go up”.
Specifically, the analyst was referring to how the USDT Dominance broke through a trendline that had been intact for almost 6 YEARS, and how the MACD on the daily chart is showing very strong bearish momentum.
Overall, Moustache insists that the “biggest Altseason since 2017 is loading imo”.
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