A sharp drop in transaction fees on Ethereum could be a positive sign for the network’s underlying Ether. ETHUSD Token, said one analyst, citing historical data.

“Every time ETH gas fees drop to lows, it has often been a sign of a medium-term price bottom,” said Ryan Lee, chief analyst at Bitget Research, in a Friday note to CoinDesk. “ETH prices tend to rise sharply after this cycle, and when that moment coincides with a rate cut cycle, the market’s wealth effect is full of opportunity.”

Gas refers to the necessary cost a user must pay to conduct a transaction on the network. Fees dropped to as low as 0.6 Gwei (a unit of gas) earlier this week, with low-priority transactions costing just 1 Gwei or less – a rare occurrence in recent years. Fees represent a more than 95% drop from the 83.1 Gwei level in March, when the network saw a surge in activity.

The lack of demand for Ethereum block storage and the preference for using applications on other blockchains likely led to the drop in fees, Lee said.

“The drop in Ethereum gas fees to a five-year low is due to the migration of meme season and dapp interactions to other, faster and cheaper blockchains such as Solana and Layer 2, as well as the long-awaited Dencun upgrade, which has improved network efficiency and thus reduced gas fees,” he explained.

Dencun is referring to two major updates in March that changed the way transactions were processed and validated on the Ethereum network. Since July, Solana-based application Pump has pocketed more fees than the entire Ethereum network in a single 24-hour period several times, most recently on August 13.

Meanwhile, the smaller amount of Ether ETHUSD Burning due to lower fees means that the supply of the token has started to increase.

Data shows that nearly 16,000 ETH, or nearly $42 million at current prices, have been added to the total Ether supply over the past week, putting the supply on a 0.7% growth trajectory this year.