Bitcoin (BTC) is currently trading in a 3-month price range with low exchange and on-chain volume. Despite this, the average transaction fees for Bitcoin reached an all-time high of $195 on June 8. Data from the last 144 blocks shows that miners received 821.46 BTC, worth $57 million, with an average of 2.5796 BTC per block.
This surge in fees has pushed the daily average transaction fee on the Bitcoin network to 281,030 sats, or $195. Sats are the smallest unit of Bitcoin named after the cryptocurrency’s creator, Satoshi Nakamoto. This means that every transaction in the last 144 blocks had an average extra payout to miners.
Historical data shows that the network previously reached a high of $127.97 per transaction in April 2020 during the halving event. This was followed by another peak in April 2021 when fees surpassed $60 for the first time during the bull cycle. On June 7, the average transaction fee peaked at $83.74, indicating a continued rise in fees.
Bitcoin on-chain analysts have identified a UTXO consolidation spiral from the crypto exchange OKX, with 974 consolidation transactions left in the mempool. This activity has led to an increase in average transaction fees, as OKX outbids itself by paying higher fees for each transaction. When there is increased demand for limited space on the blockchain, fees tend to rise as users compete and outbid each other to have their transactions included in the next block.
Bitcoin’s protocol is intentionally designed with a small block size and a 10-minute time interval between each block, leading to increased fees during times of high demand. Other cryptocurrencies have tackled the fee issue differently, with Bitcoin Cash increasing block size, Litecoin decreasing block interval, Monero utilizing a combination of both, and Nano eliminating fees altogether.
As Bitcoin fees continue to climb to unprecedented levels in dollars, there is speculation in the market about the potential for a sell-off and whether the demand for block space will decrease, leading to a drop in average transaction fees. The future of Bitcoin fees remains uncertain as the network faces challenges in balancing demand and cost for users.
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