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Ethereum network records extremely low fees as on-chain activity diminishes

As the bearish week for most of the cryptocurrency market continues, many of its assets are going through a dry spell in various areas, including the second-largest crypto by market capitalization – Ethereum (ETH).

Specifically, Ethereum has been recording extremely low fee levels – which is unusual for the one indicator that many of the network’s critics often pointed out as too high when disparaging it (including the founder Vitalik Buterin, admitting they were a problem for the chain’s usability).

The information about the low fees was demonstrated on a chart included in a Santiment report published on May 25.

Ethereum price (green) versus average gas used in gwei (pink). Source: Santiment

Signs of hibernation

Additionally, the connection between the low fees information and the stablecoin DAI velocity was demonstrated in a tweet and chart published by the on-chain and social metrics platform Santiment on May 26.

In it, the platform also states that the continuation of the extremely low fee levels indicates “very minimal activity and hints of stagnancy and fear.”

Ethereum log price (blue) and DAI velocity connection (pink). Source: Santiment

Providing a further explanation, the platform said that such “hibernation” behavior also applies to Ethereum’s often paired stablecoin DAI, whose velocity showed extreme levels just shortly after Ethereum’s November all-time high.

In the report that goes into more detail, the platform explains the connection between low fees and little activity, in which “no one is interested to do anything”, to the stablecoin velocity (such as DAI).

Velocity is a measure of how quickly money is circulating in the crypto economy and, according to the platform, it “has always decreased when we went to the top. Quite low now.” Finally, the report concludes that:

“What are these two charts showing together is hibernation. It happens typically in winter. Bears sleeping in winter. Waiting for a trigger…”

As things stand, Ethereum is trading at $1,766, down 3.86% on the day and 13.40% compared to seven days before. Its market cap is currently $214.77 billion.

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