As an analyst with extensive experience in the cryptocurrency market, I have closely monitored the trend of Bitcoin transaction fees over the past few months. The recent data from IntoTheBlock revealing a 18% decrease in fees this week and the lowest fees since November 2023 is noteworthy.
The cost of processing transactions on the Bitcoin network has been on a downward trend since the peak following the halving event several months ago.
According to IntoTheBlock’s data, Bitcoin network fees have witnessed a weekly decrease of 18%, following a 27% reduction in the preceding week. These reductions have brought Bitcoin transaction fees down to their cheapest levels since November 2023.
Bitcoin Fees Are Declining
Approximately three months ago, Bitcoin boasted the most expensive transaction fees out of all cryptocurrency networks, even surpassing Ethereum‘s fees. In the days leading up to the last Bitcoin halving event, these elevated fees persisted uninterrupted due to heightened network activity.
One significant factor fueling the rise in transaction costs during that period was the debut of the Runes protocol. This eventual launch occurred on the day of the Bitcoin halving. Runes facilitate the creation and transfer of fungible tokens within the network. In conjunction with the previously introduced Ordinals protocol, which brought about Bitcoin non-fungible tokens, there was an increase in network activity and subsequently, heightened transaction fees.
After the Bitcoin halving, transaction fees took a significant drop and accounted for only about 35% of miner revenue compared to the 75% prior to the event. On the day of the halving itself, Bitcoin network fees reached an unprecedented peak of $80 million daily. However, weekly fees at the time of writing were significantly lower, amounting to less than $6 million.
According to data from mempool.space, the average cost of a Bitcoin transaction is approximately 5 satoshis per byte (sats/vByte), equivalent to around $0.0029. This is significantly lower than the 90 sats/vByte or $8.50 fee recorded in mid-April. Furthermore, data from YCharts indicates that Bitcoin’s transaction fees currently hover below the $1 million mark daily. In fact, the last time the network processed over $1 million in fees was on July 3, and on July 11, the fees totaled $721,599.
BTC Poised for a Rally?
The dip in Bitcoin transaction fees is primarily due to a decrease in network usage, which aligns with the recent market downturn. Over the last several weeks, Bitcoin has undergone a substantial price drop, reaching levels last seen in late February.
The significant cause of the recent drop in bitcoin’s price, which is the surplus supply held by German authorities, is expected to decrease soon. Consequently, there are indications that bitcoin could experience a price increase in the near future. However, it remains uncertain if the transaction fees on the network will also follow this trend.
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2024-07-13 14:20