03-01-2023 icon

NFT market rebound sends Ethereum gas fees up the hill. But for how long?

By Lucy Adegbe

Ethereum gas fees are gradually rising in response to the rebound of the non-fungible token (NFT) market.

According to an on-chain analytic firm, Glassnode, the average cost of gas has topped roughly 20 gwei in the last nine months.

In February alone, the fees reached 38 gwei, about 90% higher than it was while the bear market persisted. In a newsletter on Monday, Glassnode noted that the resurgence of activities on the network is imminent.

The NFT market rebound and gas fees

NFTs rose to popularity in 2021 with CryptoPunks and Bored Ape Yacht Club (BAYC) taking the lead. One bored ape traded at $190 at the initial stage before rising to as much as $400,000.

The booming industry became bleak with the crypto winter, forcing several projects to lay low or go extinct. After the FTX crash, BAYC fell below $100,000 for the first time.

Recently, there has been a drive in NFT activity prompted by the launch of new projects such as BAYC’s Dookey Dash game and Doodles 2.0.

As the first Bitcoin NFT is set to launch this week, NFT enthusiasts look forward to more boom and intense activities.

Gas prices respond to network activity – cost rises as users complete more transactions. This means the recent demand for gas is due to rising activity in Ethereum’s NFT market.

With gas demand hitting 97% in the last two months, it cumulates to levels that were last seen during the NFT boom in 2021, where gas fees were around 39 and 40 gwei.

“The recent attention surrounding the Blur has led to a surge in demand for block space, hence the need for more gas fees, and burning of more Ethereum via the EIP 1559,” Glassnode explains.

How high will Ethereum gas fees go?

Provided that network activities increase, there’s a greater chance for Ethereum gas fees to rise higher than it is.

As the industry looks forward to the first-ever NFT project championed by BAYC, gas prices are expected to rise. However, the reverse may be the case should the market become more bearish.