Ethereum News: Ethereum Fees Hit 5-Year Low as Network Activity Slumps — Will the Pectra Upgrade Spark a Rebound?

Ethereum (ETH) transaction fees have plunged to their lowest level since 2020, dropping to just $0.168 per transaction, according to onchain data from analytics firm Santiment. The steep decline in network fees reflects a broader drop in user activity amid market uncertainty and reduced smart contract interactions.Ethereum Gas Fees at Lowest Since 2020Santiment’s latest report shows that Ethereum network fees have hit a 5-year low, signaling a lull in user engagement. The drop is largely attributed to lower transaction demand, causing a sharp decline in bidding pressure for faster confirmations.“It’s essentially a supply and demand system,” said Santiment’s Marketing Director Brian Quinlivan. “When fewer people are transacting, users don’t need to bid much. As a result, the average fee drops.”This comes as Ethereum (ETH) continues to hover below $1,600, down over 12.5% in the past 14 days, per CoinGecko data.Market Sentiment: Retail Retreat or Rebound in the Making?Quinlivan noted that low fees often signal stagnation in trading activity, with many investors sidelined amid macroeconomic fears, including fallout from President Trump’s sweeping tariff announcements on April 2.“Prices have really threatened long-time support levels,” said Quinlivan, “but when the retail community leans away from an asset—especially one with thriving development—the odds of a surprise rebound increase.”This aligns with a broader trend across both traditional and crypto markets, many of which remain subdued despite a 90-day tariff pause for most countries.Pectra Upgrade Set for May 7: Key Features & ExpectationsAmid muted price action, Ethereum developers are preparing to deploy the highly anticipated Pectra upgrade to mainnet on May 7, 2025. The rollout follows multiple testnet delays caused by configuration bugs and network attacks. Key Highlights of Phase One:Layer-2 blob capacity will increase from 3 to 6, doubling throughput.Users will be able to pay transaction fees in stablecoins such as USDC and DAI.The maximum ETH staking limit will be raised from 32 ETH to 2,048 ETH, aimed at supporting institutional participation.Designed to further reduce network congestion and layer-2 fees.What’s Coming in Phase Two (Late 2025 – Early 2026):Introduction of a new data structure for improved storage efficiency.Deployment of data availability sampling for scalability without full data replication by nodes.Pectra builds on the momentum of Ethereum’s Dencun upgrade (March 2024), which significantly lowered costs for rollups and enhanced scalability across the ecosystem.Quiet Before the Storm?While Ethereum’s fee plunge may signal caution from traders, analysts note that low network activity periods often precede sharp recoveries, especially when fundamentals remain strong.With Pectra potentially reigniting interest in Ethereum and macro risks slowly stabilizing, investors will be watching closely to see if ETH can reclaim its bullish momentum — or if further downside is on the horizon.What’s Next?Will the Pectra upgrade revive Ethereum’s transaction volumes?Can ETH break back above $1,600 amid macroeconomic pressures?Are stablecoin-paid gas fees the key to onboarding the next wave of users?