Bitcoin is really going through the worst phase in its history. In fact, the crypto market is indeed highly volatile in nature. There are random ups and downs in the crypto market. This very nature of the crypto market makes it a difficult place for investors. However, the present situation of the BTC has gone past all possible comparisons.
In fact, the price of BTC at the time of writing this article stands at $21562.14. This figure is a striking contrast to the all-time high of $67,549. In addition, to make things even worse, recent data shows that the transaction fees of Bitcoin have declined significantly. In fact, such a low level remained unseen since April 2020.
However, that was during the early days of the pandemic. Since then the transaction fees have remained on a relatively higher level. If you wish to know more about the prevailing transaction fees of Bitcoin, then this article is the perfect stop for you. Keep reading this article for a detailed understanding of the recent Bitcoin trend.
Low Bitcoin Transaction Fees
The Arcane Research recently published its weekly report. This weekly report shows that the transaction fees for Bitcoin witnessed a 28% hit in the past week. For those who might not know, transaction fees are the small amount of money that follows every Bitcoin transfer on the Bitcoin blockchain. This is for the miners to pick it up.
During network congestions, transactions might get stuck for a while. In fact, this leads to a delay before the miners get hold of them. This is because the miners can hash only a limited number of transactions at a particular time. However, when the users want to get their transactions processed quickly, prioritize their transactions by attaching transaction fees that are higher than the average.
In fact, other users also try to compete with these users by paying more transaction fees. As a result, busy times might witness the network average blowing up quickly. On the other hand, at times when the network witnesses limited transactions, there is no need to pay higher transaction fees. As a result of this, the transaction fees might go down to a lower range.
Therefore, transaction fees depend on the traffic on the network. The Arcane Research firm published a chart that shows that the daily transaction fees of BTC dropped to $265k from $369k a week ago. This transaction fee is almost similar to the one during April 2020. This, therefore, suggests that the Bitcoin network is experiencing reduced activity at the present.
One might wonder about the reasons behind this decline in transaction fees. Well, there might be a few reasons behind this. Firstly, the daily transaction volume of BTC declined by 10% in the past week. Secondly, the block production rate has crossed above the constant value that the network generally seeks to maintain.
This enabled the miners to hash more transactions than usual. However, the demand remains low. These are some reasons for a sharp decline in the BTC transaction fees.