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Bitcoin Transaction Fees Plummet to All-Time Low
Published Apr 06, 2022 01:48PM ET
Updated Apr 06, 2022 02:00PM ET
Bitcoin Transaction Fees Plummet to All-Time Low
- Bitcoin transaction fees have hit an all-time low.
- Lightning Network, batching, miner behavior and protocol improvements have helped drive fees down.
- Bitcoin is witnessing a structural change in the market dynamics and historical correlations maintain little value.
Many have recently found the circumstances favorable to move Bitcoin (BTC) between wallets and exchanges as Lightning Network, batching, miner behavior and protocol improvements are driving fees down.
According to research done by Galaxy Digital, Bitcoin transaction fees have hit an all-time low. The research also showed that Bitcoin transaction fees have plummeted to 0.00004541 BTC ($2.06) in 2022, although the median is 0.00001292 BTC ($0.59). This is the lowest of any year except for 2011.
Galaxy Digital’s head of firmware research, Alex Thorn, suggested that the drop in fees can be attributed to the growing SegWit adoption, batching transactions, growth in the Lightning network, the collapse in miners selling, and the “reduced OP_Return usage”.
James Check, a lead on-chain analyst at Glassnode, agreed with Thorn and explained that “batching and SegWit are certainly part of the mix” because this combination will increase the number of transactions that fit in a block. This increases throughput and leads to a decrease in fee pressure.
Check added to this by saying “the number one reason I believe fees are low is we had a 50% collapse in price in May which absolutely decimated retail interest”.
According to Check, fees, active addresses and transaction counts collapsed after the sell-off in May.
Eric Yakes, author of The 7th Property” Bitcoin and the Monetary Revolution, also stated his opinion on the drop in fees. According to Yakes, “we’re witnessing a structural change in the market dynamics and historical correlations maintain little value”.
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