Gas fees on the Ethereum network have dropped to a six-month low. The average cost is $1.12 per transaction, marking the lowest figure since October 18.

Analysts from Santiment noted that this drop in gas fees could be the start of an upcoming altcoin rally.

Ethereum Gas Fees Plummet

According to Santiment, traders typically cycle between periods of extreme optimism, often characterized by the belief that a certain asset is set for exponential growth, and periods of pessimism, marked by the sentiment that it is declining.

#Ethereums average fee level has dipped to just $1.12 per network transaction, the lowest average cost in a day since October 18th.

Traders historically move between sentimental cycles of feeling that #crypto is going To the Moon or feeling that It Is Dead, which can… pic.twitter.com/8b8rLMLyIf

This fluctuation in sentiment is reflected in transaction fees, which generally peak around market highs and return to normal levels during market lows.

The recent drop in Ethereum gas fees can be attributed to the Dencun upgrade and a general lull in the broader crypto market. These developments have reduced on-chain activity, subsequently driving down Ethereum gas fees.

This contrasts with just a few months ago when gas fees on the Ethereum network soared to an eight-month high in February. This increase coincided with a substantial surge in interest surrounding an experimental token standard known as ERC-404.

On February 9, gas prices peaked at an average of 70 gwei per transaction, equivalent to approximately $60 for a standard transaction. At their peak, gas costs surged as high as 377 gwei, a level not seen since May 12, 2023.

The price of Ethereum has recently seen a modest rally, with a 4.3% gain over the past week, according to data from CoinGecko. However, as of today, ETH has encountered a 4% decline, erasing the gains from the previous week and currently trading around $3,200.

Ethereum’s Circulating Supply Surges

Meanwhile, the decreased activity on the Ethereum network has led to an increase in the circulating supply of ETH, reaching its highest point in the past month.

Data shows that over the last 30 days, 74,458 new ETH were issued, while only 57,516 were burned, resulting in a net supply increase of 16,979 new tokens. This marks a shift from the previous five months, which experienced consistent deflationary trends.

Despite this recent increase in ETH-based inflation, the network has burned over 437,000 tokens since transitioning to a proof of stake consensus mechanism in September 2022.

In other news, asset manager Franklin Templeton made headlines by listing its spot Ethereum exchange-traded fund (ETF) on the Depository Trust and Clearing Corporation (DTCC) website.

This development has reignited investors optimism regarding the potential approval of an Ethereum ETF by the SEC, with expectations for a decision in May.