When a company or cryptocurrency seems like it’s finally solving one of its long-standing challenges, it can be a good time to invest. A turnaround narrative can push prices higher for a long time, especially when it’s backed by real changes that add value.

On that note, there’s some new evidence that Ethereum (ETH 0.39%) is getting closer to tackling one of its most notorious bugbears. But, from a slightly different perspective, that same evidence can also be interpreted as a bearish sign. So which is it, and is this coin worth buying right now?

This is not unambiguously positive news

On April 20, Ethereum had some of the lowest gas (user) fees of the past five years. The average on-chain action requiring spending gas incurred a fee of close to $0.01. Just a few days later, that had risen to about $0.26 on average.

But, as well-informed investors already know, even those slightly higher gas prices are, for Ethereum, close to rock bottom. More importantly, they’re the culmination of the chain’s numerous attempts so far at scaling up its capacity and spinning off traffic to more efficient Layer-2 (L2) networks to offer faster transaction times and lower transaction costs for users. Compared to the $50 gas fees of yesteryear, the chain looks like it’s finally cheap enough to actually use. So, is the chain’s biggest and most persistent drawback finally put to rest?

Not exactly. Executing a token swap on Ethereum still costs an average of $0.69, with highs of $4.30 not uncommon, and transferring stablecoins often costs about $0.67. Furthermore, those actions take an average of 30 seconds to complete, which is quite slow.

The larger issue is that this latest gas fee low isn’t being driven by any new tech update that wasn’t already in place months ago, when costs were a bit higher. Two number illustrate this point. On April 21, Ethereum processed 1.1 million transactions. On the same date three years ago, it also processed 1.1 million transactions.

In light of that information, it’s a no-brainer why it’s cheaper to use Ethereum today than it was then. The network isn’t nearly as congested because its capacity has been upgraded while traffic has remained more or less stable, so gas prices have declined. And that isn’t a reason to be bullish. If anything, it’s a reason to be bearish.

Caution is the better approach for now

The investment thesis for buying Ethereum is that its ecosystem of on-chain projects in decentralized finance (DeFi), non-fungible token (NFT) markets, artificial intelligence (AI), and decentralized physical infrastructure (DePIN) networks will attract capital to the chain and thereby boost the price of its native token, which is necessary for using all of the applications hosted there. If that thesis were being proven true over time, the network would experience higher transaction volumes, as more users would be making more transactions with more apps, expending more money, and parking more assets on the chain to do so more easily. The chain’s stagnant transaction volume over time tells the opposite story: Ethereum is, on average, not seeing more adoption and usage.

This meshes neatly with its declining price and terrible investor sentiment about its future prospects. It’s down about 38% during the past three years. There would be an easy case to make for buying the dip if there was a clear trend toward greater adoption, or clear dominance in an emerging growth segment like artificial intelligence infrastructure or agents. Meanwhile, rivals like Solana are giving Ethereum a run for its money in terms of capturing those segments, mainly because it’s much cheaper and faster.

It is not inherently a bad thing that Ethereum’s gas prices have declined. If they can stay very low even as network usage increases, assuming it ever does, it would be bullish. But until that happens and remains consistent for at least a few months, investors should probably avoid buying Ethereum. It hasn’t proven that its scaling problems are a thing of the past, and it hasn’t proven to investors that real value is being generated on its chain to the point where it’s worth buying and holding.