On-chain data shows that Ethereum transaction fees have been rising again recently. Here’s what could be behind this trend.

Ethereum Average Fees Has Registered A Notable Uptick Recently

In a new insight post, the on-chain analytics firm Santiment talked about how the Ethereum network has recently become more expensive. The metric of interest here is the “Average Fees,” which keeps track of the average fees that ETH users are currently attaching with their transfers.

How much fees senders might be willing to pay comes down to the activity level the blockchain is witnessing. In times of high traffic, transfers can get stuck for a while, as ETH has only a limited capacity to handle transactions. Those looking to beat the crowd, thus, go with a higher-than-average fee.

This user competition is what governs how high the average would get. With little activity on the network, senders will go for the cheapest amount possible, as there isn’t much incentive to pay a high fee.

Now, here is a chart that shows the trend in the Ethereum Average Fees over the last few months:

Looks like the value of the metric has been heading up in recent days | Source: Santiment

As is visible above, the Ethereum Average Fee has been climbing recently and currently sits at $3.2, the highest level since early August. However, this previous spike in August, although great in scale, had lasted very briefly.

From the chart, it’s visible that this previous spike had coincided with the crash that the cryptocurrency had observed around then. Thus, the fee surge was because the investors had been making panic moves and were willing to pay high to get them done fast.

Before this spike, the last time a sustained trend in fees similar to the recent one had been observed was in late May. As such, the latest value of the metric has effectively been the highest point in four months.

Now, as for what’s behind this latest trend, an obvious reason would seem like the rally the asset has recently enjoyed. Sharp price action attracts attention, so the Average Fees generally go up.

However, details of the fee breakdown reveal that the normal Ethereum traders may not drive the increase.

The distribution of the ETH fees over the past week | Source: Santiment

As it turns out, Wrapped Ethereum (WETH) has recently been the token providing the largest contribution to network fees. As Santiment notes:

The dominance of WETH in fee contributions indicates that traders are heavily utilizing DeFi platforms, likely engaging in liquidity pools, trading, and other financial activities that require WETH as a base asset.

ETH Price

At the time of writing, Ethereum is floating around $2,700, up 5% over the last seven days.

The price of the coin seems to have been consolidating over the last few days | Source: ETHUSDT on TradingView

Featured image from Dall-E, Santiment.net, chart from TradingView.com

Hong Kong regulators are reportedly close to approving staking features for spot Ethereum exchange-traded funds (ETFs). This development comes as the region continues its efforts to establish itself as a crypto hub.

Andrew Vranjes, Blockdaemon’s Head of International and Vice President, recently spoke on this potential approval during an interview at Token2049 in Singapore.

Vranjes revealed that Blockdaemon has been actively working with spot crypto ETF issuers in Hong Kong to devise staking solutions that align with regulatory requirements.

Progress In Ethereum Spot ETFs In Hong Kong

Vranjes expressed optimism about the progress, indicating that regulators might allow staking within specific guidelines. He hinted that the initial approval might be limited to certain investor categories, such as accredited investors, before potentially expanding to a broader market.

“We’re positive because of the level of conversation,” Vranjes stated, pointing out that the discussions between Blockdaemon, ETF issuers, and regulators are ongoing, involving detailed documentation and regulatory scrutiny.

Vranjes particularly revealed that Blockdaemon is deeply engaged in discussions with clients and regulators, exchanging comprehensive documents to ensure that the proposed staking solutions meet regulatory standards.

He suggested that an official announcement regarding Ethereum staking for spot ETFs in Hong Kong could be imminent, emphasizing that the current phase involves meticulous planning and compliance checks.

“We’re in that sort of fine-grained kind of motion. I think we’re closer to the announcement than further away at this stage,” Vranjes noted.

ETH Spot ETF Performance So Far

Hong Kong’s spot crypto ETF flows lag significantly behind those in the US. For instance, the combined trading volume of the three spot Ethereum ETFs in Hong Kong stood at $30,740 as of Tuesday (September 17), with no daily flows recorded.

In contrast, nine ETH ETFs in the US saw a combined trading volume of $176.26 million and net daily outflows of $15.11 million on the same day, according to SosoValue data.

📊 Ethereum ETF Tracker | 2024-09-17

🟥 Daily Total Net Inflow -$15.11M
💰 Total Value Traded $176.26M
🏦 Total Net Assets $6.41B
📊 ETF Market Value Ratio 2.27%

🥇 Net Inflows/Outflows for Each ETF
🟩 ETH +$2.77M
⬜️ ETHW $0
⬜️ ETHA $0
⬜️ ETHV $0
⬜️ CETH $0
⬜️ QETH… pic.twitter.com/IXlCkAr2HI

— SoSoValue Research (@SoSoValue) September 18, 2024

Vranjes suggested that Hong Kong could potentially approve Ethereum staking for ETFs before the US, noting that would not surprise him.

If Hong Kong successfully rolls out Ethereum staking for spot ETFs, it could set a precedent, potentially influencing other markets.

The US, which currently has higher trading volumes in crypto ETFs, could face pressure to adopt similar measures. The move could also boost Ethereum’s position in the global market, offering investors additional ways to generate returns.

Featured image created with DALL-E, Chart from TradingView

Following the Solana 1,000% run-up in 2023 and its re-entry into the crypto top 10 by market cap, it has been pitched against Ethereum once again. This was further propelled by the fact that Solana saw its blockchain activity surpass Ethereum’s, and even bringing in more revenue at a time. However, one place where Ethereum continues to surpass Solana is in its market cap. With Solana still well below Ethereum in this category, how much will one SOL cost if it is eventually able to reach ETH’s market cap?

Solana With Ethereum’s Market Cap

Currently, the Solana market cap is sitting at $70.3 billion, compared to Ethereum’s $315 billion at the time of writing. This means that the ETH market cap is more than four times larger than that of SOL. It shows that SOL still has a ways to go before it can catch up with ETH, but the gap is not so wide that it is impossible, especially when it comes to cryptocurrencies.

Using data from MarketCapOf, which compares the market cap of two cryptocurrencies and then show what one would be at the market cap of the other, we can see how high the SOL price would be if it were to attain the market cap of ETH, and it is substantial.

According to the website, if the Solana market cap were to touch $315 billion like Ethereum, its price will cross $600. More specifically, it would $670.83, which is a 4.47x increase from here, or a 447% increase. This would also push it above the likes of BNB and Tether’s USDT in terms of market cap, making it a top 3 cryptocurrency.

On the flip side of this, if the Ethereum market cap were to fall below to the market cap of Solana, it would send the price crashing to levels not seen since 2021. The website puts ETH at $587.83 at a market cap of $70.7 billion, which would be a 77,5% crash.

Reaching Half The Market Cap Of ETH

VacEck analysts have recently chimed in on the Solana and Ethereum debate, forecasting how high the former can go against the latter. The analysis suggests that the SOL market cap could reach at least half of that of ETH, which would put it somewhere around $157 billion. In this case, the SOL price would be expected to rise above $330.

The analysts explained that this could happen due to the increase in the activity on the Solana blockchain, which has overtaken Ethereum. One major hiccup though is the fact that institutional adoption of SOL has been slow. However, it does not erase the bullishness that continues to surround the altcoin.

Featured image created with Dall.E, chart from Tradingview.com