While Ethereum tries to stave off sky-high gas fees, Bitcoin is seeing the opposite trend: a drop in transaction fees.

Arcane Research presented several reasons to help explain the phenomenon and help investors understand the events of the year.

Please keep it down!

How much have Bitcoin transaction fees decreased this year? The average transaction fee was typically under $ 10 in January but rose to nearly $ 30 between April 21 and May 21. After the crypto crash in May, that number fell, then spiked in the summer. The past three to four months, however, have seen lows of less than $ 1.

The Arcane Research report noted that one factor responsible for this change could be a smaller bitcoin mempool size. A mempool refers to a pool of transactions that have yet to be confirmed by the network. Of course, an overloaded mempool means more fees.

Taking Bitcoin 1,2,3

Another important factor is the use of Segwit. This Bitcoin network upgrade helped increase available block space and storage efficiency by removing signature data from transactions. Since the block boundary is exceeded less and less frequently, the mempool is less crowded. This in turn means fewer transactions.

The Arkane Research report states:

“In the past six months from $ 15, Segwit launches have seen a significant surge, from 50% at the end of May to 82% today. This could be an important explanation for the falling fees. “

Source: Arcane Research

Aside from this development, the aforementioned report also pointed to the decreasing daily transaction count. This rose from over 350,000 transactions per day at the beginning of 2021 to 270,000 – 280,000 transactions per day at the last count.

However, another factor highlighted in the report was transaction batching, which is used by many major exchanges. This simply means that multiple requests are put into a single batch of transactions to keep the Bitcoin network from becoming overloaded. Here, too, the fees decrease as the congestion of the mempool and the number of transactions per day are reduced.

The Arkane Research report states:

“On January 1st, the average 30-day number of payments per transaction was 2.11 compared to the current level of 2.41.”

Bitcoin blowing up

It is important to note that a decrease in transactions per day does not mean a decrease in Bitcoin investors. In fact, data from Glassnode showed that Bitcoin addresses greater than 0 BTC had hit a new ATH of 38.76 million. In context, the last time the 38.7 million address mark was exceeded was before the crypto market crash in May.

The number of #bitcoin addresses with a balance other than zero has reached a new all-time high of 38.76 million addresses.

The previous high of 38.7 million was hit seven months ago on April 23, and it took 213 days to fully recover.

Live chart: https://t.co/jbyYVmnwcH pic.twitter.com/Fxa9MMwhaW

– glassnode (@glassnode) November 23, 2021


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