Bitcoin Transaction Fees Hit One-Year Lows, How Does This Affect The Price?
16 Settembre 2021 - 1:00AM
NEWSBTC
Bitcoin transaction fees are usually an indication of how holders
are moving their coins around. When the network gets congested due
to a high number of transactions, the transaction fees go up,
indicating a high volume of traffic on the network. Transaction
traffic usually is high around bull markets when the price of the
digital asset is up. Usually leading to a sell-off as investors try
to take profits. Related Reading | Bitcoin Suffers As Mid Caps
Cryptos Establish Market Dominance With Wide Margin One thing, this
recent bull market has been anything but usual. So many things that
are normal around bull markets have not happened with this bull
market. An example is the declining reserves on exchanges. Bitcoin
going up would often trigger an increase in the exchange reserves
with the bull market, which happens because investors are trying to
sell off their coins. This bull market, however, has shown the
opposite. Exchange reserves have plummeted, and along with it,
bitcoin transaction fees are at one-year lows, indicating that
investors are carrying out fewer transactions on the blockchain.
Transaction Fees Plummet The current climate for bitcoin
transaction fees has been at levels not seen since last year. The
fees which had spike following the great miner migration out of
China have now dropped back to pre-2021 levels. Competition for
block space due to the reduced hashrate had seen the transaction
fees of bitcoin go up by about 50% in July of 2021. But as miners
have come back online and the hashrate has picked up, fees on the
network have dropped again. Related Reading | MicroStrategy
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Current network activity shows that there is now less demand for
block space on the blockchain. This is unique in the fact that
during bull markets, demand for block space is usually at its
highest. The last couple of bull markets have all shown similar
trends. Bitcoin transaction volumes have spiked in previous bulls,
leading to higher demand for block space, leading to higher
transaction fees. BTC transaction fees plummet | Source: Arcane
Research Presently, the average transaction fee for bitcoin
transactions sits at $3. Average transaction fees have not been
this low since October last year when the average fee was $3.
Comparing this to April, when the bull market was in full force,
the average transaction fee had been $61. Competition for block
space was high as investors moved their assets around. How This
Affects Bitcoin Price The price of the digital asset, like any
other asset, is tied to the demand for the asset. Given the current
transaction fees and transaction volumes, this shows that investors
are not moving too much of their digital assets around. Hence, it
points towards more hold sentiment amongst investors. This could
spell the continuation of the bull market. Maybe one last bull run
before the market finally gives in to the bears. Related Reading
| New To Bitcoin? Learn To Trade Crypto With The NewsBTC
Trading Course Hold sentiment has always been important when it
comes to the price of the digital asset. This shows that bitcoin
investors are more inclined to buy more coins instead of selling
their existing stash. Thus creating scarcity in the market, which
is evidenced by the decreased exchange reserves, which have also
hit one-year lows. Scarcity inadvertently leads to a higher
value for an asset. Playing to the basic laws of economics. BTC
ready for another $48,000 retest | Source: BTCUSD on
TradingView.com The price of bitcoin is currently above $48,000. A
successful test of the $48,000 resistance point had seen the asset
climb $400 above this, before losing hold and falling back below
this crucial point. Indicators still show a positive upward trend
in the price of the asset. Possibly a green close by the end of the
midweek trading day. Featured image from CNBC, chart from
TradingView.com
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