Assessing the “why” behind the surge in ETH gas prices due to Binance

  • Ethereum Gas Fees Rise Due to Binance’s Proof of Reserve Efforts
  • Activity on the network increased, however, sentiment against Ethereum decreased

Over the past few days, there has been a massive spike in Ethereum [ETH] gas costs and gas spent. This massive spike was caused by Binance moving large amounts of Ethereum for its proof-of-reserve efforts.

Lily Ethereum [ETH] Price prediction 2023-2024

Ethereum propels forward

As seen in the image below, Ethereum gas fees have reached new highs, reaching 222 gwei. According to Wu Blockchain, this happened because:

“Binance has consolidated funds from countless deposit addresses to the Binance14 hot wallet in preparation for the next stage of POR verification.”

This led to Binance generating 889 ETH gas fees and transferring over 437,000 ETH in order to validate its Proof-of-reserves and maintain the trust of its customers.

However, this spike in gas fees could have had a negative impact, as high gas fees could impact retail investors and affect overall sentiment against Ethereum.

From the chart provided below, it can be observed that the weighted sentiment against Ethereum was negative. However, despite this, large addresses continued to accumulate ETH.

As evidenced by the chart below, the percentage of Ethereum held by large addresses increased significantly after November 16. This support for major addresses could help sustain Ethereumit is growth.

Source: Santiment

Another bright spot for Ethereum would be the spike in network activity.

The number of active addresses on the Ethereum network has increased significantly over the past two weeks and stood at 33.3,000 addresses at the time of writing.

Coupled with the aforementioned information, the number of addresses holding more than 0.01 ETH also hit a four-month high of 22,000 addresses, according to glass knot.

Are investors “short-sighted”?

Despite support from major addresses and strong activity on the Ethereum network, traders were not confident in Ethereum’s growth.

The image below revealed that Ethereum’s funding rate has decreased. Thus, traders who took short positions against Ethereum had risen and were willing to pay long-term traders.

Source: CryptoQuant

It remains to be seen whether these short sellers will be able to make a profit.

At the time of writing, ETH was trading at $1,272.6. Its price has increased by 0.62% in the last 24 hours.

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