07 Mar 2022

Bitcoin transaction fees have stayed abnormally low for seven months

Bitcoin's transaction fees have stayed low since July 2021, showing no signs of rising.
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Source: CoinMetrics
On April 21st, 2021, the average Bitcoin transaction fee reached an all-time high of $63. From that date and until July, transaction fees plunged and have since stayed at low levels.Some analysts point to the increased adoption of Segwit in the summer of 2021 as the primary driver for the lower transaction fees since the SegWit upgrade reduces the size of transactions, making room for more transactions per block.Still, we can see that the average number of transactions per day was well above 300,000 during the peak in April 2021. Since August, when fees started bottoming out, the number of transactions per day has been between 200,000 to 250,000 on average.Therefore, increased SegWit adoption is most likely not the main driver behind the low transaction fees. Instead, it's more likely that a lower number of transactions per day has driven down the average transaction fee.During periods of retail frenzy, the demand for making on-chain transactions skyrockets. Retail has not been particularly interested in bitcoin since the spring of 2021, moving over to other cryptocurrencies or NFTs, elevating Ethereum’s transaction fees instead of Bitcoin’s.
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