{"id":18981,"date":"2025-03-25T13:47:15","date_gmt":"2025-03-25T13:47:15","guid":{"rendered":"https:\/\/dogewisperer.com\/?p=18981"},"modified":"2025-03-25T13:47:15","modified_gmt":"2025-03-25T13:47:15","slug":"eth-price-to-1-2k-ethereums-pos-deflation-ends-with-fees-at-all-time-lows","status":"publish","type":"post","link":"https:\/\/dogewisperer.com\/?p=18981","title":{"rendered":"ETH price to $1.2K? Ethereum’s PoS ‘deflation’ ends with fees at all-time lows"},"content":{"rendered":"
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Ether\u2019s (ETH<\/a>) price printed a bear flag on the daily chart, a technical chart formation associated with strong downward momentum. Could this bearish setup and decreasing transaction fees signal the start of the second leg of ETH\u2019s drop toward $1,200?<\/p>\n

Ethereum\u2019s network activity slumps<\/strong><\/h2>\n

The market drawdown, fueled by US President Donald Trump\u2019s tariff threats<\/a>, saw Ether\u2019s price drop by nearly 50% from a high of $3,432 on Jan. 31 to a 16-month low of $1,750<\/a> on March 11.<\/p>\n

While ETH has rebounded 18% since, it failed to produce a decisive break above $2,000 for a second time in less than 10 days.<\/p>\n

This weakness is reflected in onchain activity, with Ethereum\u2019s daily transaction count dropping to levels last seen in October 2024, before Donald Trump\u2019s presidential election victory<\/a>.<\/p>\n

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Ethereum daily transaction count. Source: CryptoQuant<\/em><\/p>\n<\/figcaption><\/figure>\n

Ethereum’s average transaction fees also plummeted, reaching an all-time low of 0.00025 ETH ($0.46) on March 24.\u00a0<\/p>\n

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Ethereum: Fee per transaction. Source: Source: CryptoQuant<\/em><\/p>\n<\/figcaption><\/figure>\n

Low transaction count and fees suggest less demand for block space \u2014whether for DeFi, NFTs or other DApps. It suggests lower network activity, often correlating with diminished interest or market confidence.<\/p>\n

Historically, Ether\u2019s price has correlated with periods of high network activity. For example, during the 2021 DeFi boom, fees spiked to as high as 0.015 ETH due to high demand.\u00a0<\/p>\n

Conversely, lower fees require less ETH, which puts downward pressure on price. <\/p>\n

ETH supply inflation returns<\/strong><\/h2>\n

Other key factors weighing down Ether\u2019s performance are its declining burn rate and rising supply.\u00a0\u00a0<\/p>\n

With transaction fees declining, the daily ETH burn rate has plunged to all-time lows, resulting in an inflationary trend.\u00a0<\/p>\n

According to data from Ultrasound.money, the projected ETH burn rate has declined to 25,000 ETH\/year, and its supply growth has risen to an annual rate of 0.76%, bringing the issuance rate to 945,000 ETH per year.<\/p>\n

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ETH burn rate. Source: Ultrasound.money<\/em><\/p>\n<\/figcaption><\/figure>\n

As a result, Ethereum\u2019s supply has steadily increased since April 2024, reversing the deflationary period ushered in by the switch to proof-of-stake (the Merge) in September 2022<\/a>. Ethereum\u2019s total supply has now surpassed pre-Merge levels, as shown in the chart below.<\/p>\n

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Ethereum supply reclaims pre-Merge levels. Source: Ultrasound.money<\/em><\/p>\n<\/figcaption><\/figure>\n

The Merge eliminated Ethereum\u2019s mining-based issuance, which previously had a high supply inflation rate. Ethereum also implemented the London hard fork<\/a> in August 2021, which introduced a mechanism that burns a portion of transaction fees.\u00a0<\/p>\n

Related: <\/strong><\/em>Ethereum down 57% from its all-time high, but it\u2019s still worth more than Toyota<\/strong><\/em><\/a><\/p>\n

When network activity is low, the amount of ETH burned is lower than newly issued ETH, making the asset inflationary.<\/p>\n

Ether\u2019s bear flag targets $1,230<\/strong><\/h2>\n

The ETH\/USD pair is positioned to resume its prevailing bearish momentum despite the recovery from recent lows, as the chart shows a classic bearish pattern in the making.<\/p>\n

Ether\u2019s price action over the past 30 days has led to the formation of a bear flag<\/a> pattern on the daily chart, as shown in the figure below. A daily candlestick close below the flag\u2019s lower boundary at $2,000 would signal the start of a massive breakdown.<\/p>\n

The target is set by the flagpole\u2019s height, which comes to about $1,230, an approximately 40% drop from the current price.<\/p>\n

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ETH\/USD daily chart featuring bear flag pattern. Source: Cointelegraph\/<\/em>TradingView<\/em><\/a><\/p>\n<\/figcaption><\/figure>\n

Despite these risks, some traders remain optimistic about Ether\u2019s upside potential, with analyst Jelle saying<\/a> that the price is bouncing and trying to get back above the key support level at $2,200.<\/p>\n

If this happens, \u201cwe\u2019ll have a monster deviation on our hands,\u201d Jelle added.<\/p>\n

Fellow analyst Crypto Ceaser said that Ethereum is \u201cheavily undervalued\u201d and is bottoming out at current levels.<\/p>\n

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.<\/p>\n