Bitcoin Transaction Fees Remain Record Low Despite Recent Increase
The data shows that Bitcoin’s total transaction fees have remained at historically low values despite peaking during the recent LUNA crash.
Bitcoin transaction fees have moved sideways since July 2021
According to the latest weekly report from Glassnode, the total transaction fees on the BTC network have been very low for almost a year.
The “total transaction fee” is a measure of the sum of the fees that each network user pays for each transaction on the Bitcoin blockchain.
Miners select transactions based on which ones will be the most profitable to handle at the time. Transactions with high fees are naturally collected first.
During times of high network demand (ie, a large number of transactions), the mempool becomes congested.
This means that some transactions may be blocked for a while as miners take their time getting through the congested pool of users.
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So in times like these, users who want their transfers to be prioritized start paying higher fees. More and more users are joining them and the average transaction fees are increasing.
However, when demand on the Bitcoin network is low, there is no longer such fierce competition and fees naturally decrease.
Now, here is a graph showing the trend of total transaction fees on the BTC blockchain in recent years:
It seems that the value of the metric recently observed a small spike | Source: Glassnode’s The Week Onchain – Week 21, 2022
As you can see from the chart above, the total Bitcoin transaction fees have been very low, barely around 10-12 BTC per day, since July of last year.
The value of the indicator has spiked recently following the collapse of LUNA and UST, and the ensuing market chaos.
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This spike doubled transaction fees, but despite this increase, fees remained well below what was seen in 2020 and the first half of 2021.
One effect of these low transaction fees has been that the income of Bitcoin miners has also been quite low in recent months.
At this time, it is not known when the fees will be recovered. One thing is for sure, there will need to be strong demand for block space for rates to see significant movement.
At the time of writing this article, the price of Bitcoin hovers around $29,100, down 1% in the last seven days. The chart below shows the BTC price trend over the past five days.
It seems that the price of BTC has fallen in the last two days | Source: BTCUSD on TradingView Featured Image from Unsplash.com, Charts from TradingView.com, Glassnode.com
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