The Pectra upgrade follows the Dencun upgrade in March 2024, which also aimed to reduce fees and enhance the economic structure of Ethereum rollups.

The Ethereum network has seen transaction fees plummet to a five-year low of $0.168 per transaction, attributed to decreased activity on the blockchain, as reported by analytics platform Santiment on April 17, 2025.

Market concerns intensified after Trump's announcement of sweeping tariffs, which have affected both traditional and cryptocurrency markets, leaving most assets below pre-announcement values.

Recent selling activity contrasts with low network usage but coincides with upcoming technical upgrades, leading to mixed signals about the market's future direction.

This decline in fees is primarily due to fewer users sending Ether (ETH) and engaging with smart contracts, which has reduced demand and competition for transaction confirmations.

Despite the low fees, Ethereum's price has dropped over 12.5% in the past two weeks, currently trading just below $1,600, with no significant changes in the last 24 hours.

Brian Quinlivan from Santiment noted that low fees often precede price rebounds, but current market uncertainty has made traders hesitant to return to their usual trading behaviors.

Data from Lookonchain indicates that long-term Ethereum holders are beginning to sell their positions, particularly in the $1,500 to $1,700 price range, which some analysts view as a potential warning sign for the market.

Traders remain cautious about increasing transaction frequency, influenced by ongoing global economic uncertainty following significant tariffs imposed by U.S. President Trump on April 2, 2025.

Quinlivan explained that high fees occur when many users compete to have their transactions processed quickly, while low activity reduces the need for bidding on fees.

A major upgrade to Ethereum, known as Pectra, is scheduled to launch on May 7, 2025, featuring enhancements such as increased layer-2 blob capacity, reduced transaction fees, and the option to pay fees using stablecoins like USDC and DAI.

The first phase of the Pectra upgrade will raise the maximum staking limit from 32 ETH to 2,048 ETH, with a second phase planned for late 2025 or early 2026 to improve data storage efficiency and scalability.