Ethereum’s (ETH) average gas price has reached a record low of just 1 gwei, approximately $0.06, in 2025, sparking discussions about the implications for the network’s scalability and overall health. Gas fees are the costs users incur to transact on the Ethereum blockchain, and a significant drop in these fees often suggests either improved scalability or decreased network activity. In this case, reduced usage seems to be the key factor behind the decline.
The introduction of Ethereum’s blobs update in early 2024 led to lower transaction costs, particularly on Layer 2 (L2) protocols. Some analysts believe this update contributed to the shift of many transactions from Layer 1 (L1) to L2 solutions, resulting in diminished L1 activity. This shift, combined with a reduced number of active users, has played a role in the recent drop in base fees.
For context, Ethereum‘s gas fees reached over 90 gwei during the March 2024 peak, when ETH surged to $4,000. Similarly, spikes above 25 gwei were observed during past ETH rallies, marking local price tops. The early December 2024 spike followed the same pattern as ETH attempted another run toward $4,000. However, these periods of higher gas fees coincided with higher levels of network activity.
In contrast, the current period of low average gas fees aligns with a decline in active Ethereum users. From December 2024 to February 2025, the number of average active addresses dropped from 403K to 380K, according to CryptoQuant. Additionally, ETH’s supply has now returned to pre-Merge levels, which could be contributing to a more subdued market sentiment around the asset.
Despite the negative pressure, Ethereum’s recent price dip has been met with increased demand from U.S. investors, as indicated by the Coinbase Premium Index. A sustained positive reading on this indicator could signal a potential rebound for ETH, while a shift to the negative could limit any recovery.
Also Read: Bitcoin and Ethereum Options Expiry Signals Mixed Market Sentiment Amid Economic Uncertainty
As Ethereum remains under $3,000, the future of its price may hinge on broader market factors, including upcoming economic reports like the U.S. January Jobs report. The next few weeks will likely be critical in determining ETH’s trajectory in 2025.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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