- There was a significant reduction in Bitcoin’s transaction count in the last seven days.
- The dip was connected to decreasing inflows to recently approved spot ETFs.
Transaction fees on the Bitcoin [BTC] network dropped for the second consecutive week as users showed less urgency to get their transactions validated quickly.
Bitcoin becomes quieter
According to blockchain analytics firm IntoTheBlock, miners collected $16.4 million in network usage charges over the last week, marking a 30% plunge.
Interestingly, the decline in fees came despite an 8% jump in Bitcoin’s market price.
AMBCrypto analyzed Santiment’s data and spotted a significant reduction in Bitcoin’s transaction count in the last seven days.
Indeed, the number of transactions came down from around 631,000 on the 28th of January to just 328,000 on the 4th of February, a decline of around 48%.
The drop could be attributed in part to less network participation by users. The daily active user count fell by more than 10% over the last week.
Source: Santiment
Since the network was not jammed, users didn’t have to bid up fees to get their transactions included in the blockchain database.
As per AMBCrypto’s analysis of Mempool data, the fee rate with the highest priority was the same as that of the one with no priority. This meant that the queue for unconfirmed transactions wasn’t long enough.
Source: Mempool
Is this the main catalyst?
IntoTheBlock connected the dip in network activity to a fall in inflows to recently-approved spot ETFs.
AMBCrypto validated this assertion using data from SoSo Value. Indeed, daily net inflows declined by 68% over the last week. This could have most likely impacted trading activity and hence less network usage.
Source: SoSo Value
Miners book decent revenue
The silver lining amidst this development was that miners’ earnings weren’t significantly impacted.
The total miner revenue, which includes the fixed block rewards, increased by 4% over the week, as per data analyzed from Santiment.
The rise in Bitcoin’s market value, as highlighted earlier, could have compensated for the drop in fees.
Source: Glassnode
Read Bitcoin’s [BTC] Price Prediction 2024-25
Meanwhile, the Bitcoin market was reverberating with greed sentiment, as per AMBCrypto’s scrutiny of Hyblock Capital’s data.
This meant that more traders were looking to accumulate the king coin, which could, in turn, help boost prices.
Source: Hyblock Capital