Ethereum transaction fees hit a 7-year low, ETH outperforming Bitcoin: Key data indicates the rally is still sustainable

The Federal Reserve cut interest rates by 25 basis points as expected, and the market responded swiftly, with Ethereum emerging as the biggest winner. Although Bitcoin has been range-bound around $92,000, ETH managed to hold above $3,300, maintaining its pre-meeting gains and highlighting its sensitivity to liquidity cycles. This rally is not driven by leverage but by a structural revaluation fueled by spot demand. Data from CryptoQuant shows that despite ETH’s price rise, derivatives market funding rates remain low, indicating that there is no typical high-leverage bubble accompanying the rally.

On-chain data also supports this trend. According to Santiment, in the three weeks before the Fed meeting, “whales” and “sharks” collectively accumulated about 1 million ETH, worth over $3.1 billion. This suggests that institutions are betting early on for the Fed to continue its easing cycle rather than aggressive tightening. Meanwhile, approximately $66.5 billion in stablecoin reserves on exchanges provide strong potential buying pressure for the rally.

However, Ethereum’s fundamentals are also undergoing structural changes. After the Dencun upgrade, Layer-2 solutions have absorbed 94% of network transactions, significantly reducing mainnet revenue. Glassnode data shows that the 90-day average of Ethereum’s on-chain transaction fees has fallen below 300 ETH per day, the lowest since 2017. This indicates that ETH’s deflationary logic has weakened in the short term. Nonetheless, the market no longer views ETH as a “yield asset” but as a “tech stock-like asset” with high growth potential in a low-interest-rate environment.

Institutional movements further reinforce this structural confidence. Tom Lee’s bullish Bitcoin firm, BitMine Immersion Technologies, increased its ETH holdings by approximately 138,452 ETH last week, bringing its total to 3.86 million ETH worth $12 billion. Additionally, a spot Ethereum ETF recorded a net inflow of $177 million on December 9, further absorbing market supply.

From a macro perspective, the most critical signal from this meeting is the Fed’s outlook for a prolonged easing path through 2026—interest rates are expected to decline continuously over the next 18 months, which benefits high-duration assets like ETH. The ETH/BTC ratio has already rebounded to 0.036, indicating that market funds are beginning to reprice Ethereum’s growth potential.

Overall, Ethereum is experiencing multiple positive factors: transaction fees at seven-year lows, continuous institutional accumulation, strong spot demand, and a more favorable macro policy outlook. Although declining L1 revenue presents long-term challenges, the current market clearly signals a return to risk appetite, with ETH becoming the core asset in this rotation.