As per the latest data report published by Blockchair, both the average and median Ethereum transaction fee has now surpassed the $20 and$11 threshold for the first time in its history earlier this Thursday – now at $23.55 and $11.75, respectively. This new all-time high closely follows the last time Ethereum broke its transaction fee records of $19 last month, on top of actually doubling the peak transaction fee records back when the “DeFi Summer” craze last year was still in full effect.
Experts see these record-breaking transaction fees within Ethereum as a result of two major reasons now proving predominant within the network. Firstly, the ever-growing demand for more ERC-20 based tokens driven by the persistently elevated interest of people towards the decentralized finance (DeFi) sector. The second reason, arguably the more likely explanation for the drastic increase, is the ongoing massive surge surrounding Ether (ETH) early this year, notably reaching all-time market price highs with many putting its year-to-date returns at an impressive 130%.
With that being said, it is not only Ethereum’s transaction fees that are significantly affected by the continual soar of ETH prices. As per the CEO of the crypto derivatives platform Delta Exchange, Pankaj Balani, a lot of options traders are now unknowingly holding large losses as the result of ETH’s current price surge. He explained that as its price continues to soar, option writers will be forced to purchase even more ETH just to cover their short gamma exposure, resulting in a “gamma squeeze.”
Notably, gamma squeeze is the term given by the options market to the feedback loop resulted from the forced extra crypto purchases driven by the intensifying scenario, which is then sparked by the particular crypto’s surging market price.
To the industry’s dismay, these factors once again highlight the unpredictable and ultra-volatile nature of the crypto market – perhaps even sullying the views of many once again towards it.