tl;dr
Ethereum's transaction fees have dropped by nearly 60% in Q1 2025, reaching their lowest level since 2020. This decline is attributed to the adoption of Layer-2 networks and the Dencun upgrade, making transactions cheaper. However, Ethereum's underlying metrics show signs of strain, with a steep dro...
Ethereum's transaction fees have decreased by nearly 60% in Q1 2025, reaching their lowest level since 2020. This decline is attributed to the adoption of Layer-2 networks and the Dencun upgrade, making transactions cheaper. However, Ethereum's underlying metrics show signs of strain, with a steep drop in ETH burn rates and a 45% price fall in Q1 2025. Despite this, long-term investors are accumulating ETH, signaling strong buy-the-dip sentiment. The upcoming Pectra upgrade, scheduled for May, is expected to restore confidence and drive renewed growth across the Ethereum ecosystem. According to IntoTheBlock, Ethereum’s total transaction fees dropped by nearly 60% in Q1 2025, falling to roughly $208 million as of April 4. Several factors have contributed to this decline. The biggest driver is the adoption of Layer-2 networks, especially Coinbase’s Base. Ethereum’s Dencun upgrade, which launched in March 2024, made transactions on these scaling layers much cheaper. As a result, more users are bypassing Ethereum’s mainnet and shifting to faster, cost-effective alternatives. Meanwhile, Ethereum’s price fell over 45% in Q1 2025, marking its worst quarterly performance since 2022. In comparison to Bitcoin, Ethereum has also underperformed, losing 39% of its value against BTC this year. Still, long-term investors are not backing down. Ethereum whales accumulated over 130,000 ETH as the price dipped below $1,800—its lowest since November 2024—signaling strong buy-the-dip sentiment. Industry experts believe the upcoming Pectra upgrade, scheduled for May, could give the asset a fresh start.