Bitcoin transaction fees fall to post-pandemic levels
Data shows that Bitcoin transaction fees have now fallen to levels not seen since April 2020, which was right after the pandemic began.
Bitcoin transaction fees have fallen to the lowest level not seen since more than two years ago
According to the latest weekly report from Arcane Research, BTC transaction fees have taken a 28% hit in the past week.
The “transaction fees” here refer to the small amount that anyone making transfers on the Bitcoin blockchain must attach to the transaction in order for miners to pick it up.
During periods of network congestion, some transactions can get stuck for a while before miners get to them, as miners can only hash a limited number of transactions at any given time.
Users who are in a hurry and want to get their transactions through as quickly as possible put a higher than average fee on their transfers so that the miners prioritize them.
Others may also try to compete against these users and add even higher fees. In this way, the network average can quickly explode during busy times.
But if there is limited activity on the network, users have no incentive to pay higher fees. Because of this, the average charges during periods of low traffic can end up being quite low.
Now, here’s a table showing how Bitcoin transaction fees and other miner-related metrics changed in value over the past seven days:
Looks like the daily miner revenues saw a 5% decline during this period | Source: Arcane Research's The Weekly Update - Week 33, 2022
As you can see above, Bitcoin transaction fees per day fell from $369k a week ago, to just $265k now. This means that the calculation observed a whopping 28% plunge in just one week.
The current level of transaction fees is the same as below the bottom more than two years ago, back in April 2020.
The report notes that this trend suggests that the chain activity of the cryptocurrency is very muted at the moment.
There are two main reasons behind the latest drop in fees. First, the daily transaction volume observed a 10% decline during the week, taking it to an all-time low.
And secondly, the block production rate has been raised above the constant value that the network normally aims for. This has meant that the miners have been able to hash more transactions than usual, while demand has been low.
The report explains that the simple dynamics between supply and demand come into play here, which has led to a plunge in taxes.
BTC price
At the time of writing, Bitcoin’s price is hovering around $21.7k, down 7% in the last week.
BTC has been moving sideways in the last few days | Source: BTCUSD on TradingView
Featured image from Michael Förtsch on Unsplash.com, charts from TradingView.com, Arcane Research
