Ethereum Heating Up – Here’s How $15M in Gas Fees Burned Could Impact the ETH Price

The Ethereum (ETH) price broke past the $1,870 resistance in the early hours of Thursday. On-chain data analysis pinpoints critical factors that could drive the ETH price rally toward the $2,000 range in the coming days.

Ethereum bulls extended the rally to a new 60-day peak of $1,875 on Thursday before a mild retracement followed. Can the rising burn rate drive the rally further?

Ethereum is Attracting Higher Volume Than Normal

Ethereum price made another leg-up toward reclaiming $2,000 on Thursday morning. Although ETH gains are still currently trailing behind Bitcoin (BTC), recent on-chain data readings show that Ethereum is now attracting an unusually high number of transactions.

Indicatively, total fees generated from daily transactions on the Ethereum network have been on a persistent rise since August, according to data from IntoTheBlock. As seen below, Total Fees generated climbed toward a 60-day peak of 3,350 ETH on November 1.

Ethereum (ETH) Transaction Fees vs. Price. Source: IntoTheBlock

The total fees metric sums up the total amount of gas network participants pay for processing transactions on a given day. Intuitively, a persistent increase in fees collected positively correlates to the number of economic transactions carried out on the blockchain network.

Typically, prolonged increased network usage is seen as a bullish signal confirming that the ongoing ETH price increase is driven by organic growth rather than just speculations on market sentiment.

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Rising Burn Rate Could Intensify Bullish Momentum

In April 2023, the Ethereum network executed the Shappela upgrade, completing the transition from the Proof of Work to Proof of Stake consensus. Under the PoS consensus, a significant percentage of the ETH Gas collected from users is now burned daily.

When coins are burned they are removed from circulation supply permanently. This inherent deflationary mechanism puts upward pressure on ETH prices.

As expected, the burn rate has also steadily risen as ETH fees and transactions increased over the last two months.

Ethereum (ETH) Total Fees Burned. Source: TheBlock

The chart above shows that 7,960 ETH worth approximately $15 million were destroyed between October 28 and November 1 alone. Notably, the 2,610 ETH (~$5 million) burned on Wednesday was the highest since August.

The deflationary impact of the rising burn rate increases market scarcity in the long term. If the burn rate continues to heat up, Ethereum price could gain some ground on Bitcoin as the year-end draws closer.

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ETH Price Prediction: Road to $2,000?

From an on-chain perspective, Ethereum price looks set to reclaim the $2,000 territory in the days ahead.

The Global In/Out of the Money data, which is an on-chain representation of Ethereum holders’ historical buying trends, also supports this narrative. It shows that the $1,880 territory is the most significant resistance blocking the $2,000 territory.

As depicted below, 9.12 million addresses hold 39.13 million ETH bought at the minimum price of $1,880. If they activate an instant sell-off, this could trigger another retracement.

But a decisive breakout above that zone could see the ETH price rally reach $2,000 as predicted.

Ethereum (ETH) Price Prediction | GIOM data | Source: IntoTheBlock

Yet, the bears could also invalidate that prediction if Ethereum’s price dips below the $1,600 mark. But as observed above, the bulls will likely mount a strong support buy-wall around $1,650.

The chart above shows that 7.6 million addresses currently hold 13.27 million ETH bought at the minimum price of $1,640. If they can HODL, they will likely prevent a major Ethereum price correction.

But if that support level caves in, it could trigger a prolonged Litecoin price decline toward $55.

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