Bitcoin transaction fees have plummeted to their lowest point in four years, with the average cost per transaction dropping to a mere $38.69 on July 7. This dramatic decline has sent ripples through the crypto community, raising questions about its impact on miners and the overall health of the Bitcoin market.
Should you be concerned? Let’s dive deeper to understand.
On July 7, Bitcoin transaction costs fell to $38.69, a level not seen since 2020. This substantial reduction is primarily due to a decrease in demand for block space and data volume, leading to lower costs for users.
Miners Stay Profitable!
Despite the reduced fees, Bitcoin miners continue to see profits. They processed a total of 673,752 transactions on July 7, with Bitcoin transactions comprising 89.7% of this total. Other protocols, including Ordinals (0.7%), BRC-20 (4.1%), and Runes (5.4%), made up the rest.
Miners’ profitability remains steady, with daily miner revenue accounting for 1.14% of the total transaction volume. This is largely due to reduced network difficulty, allowing miners to use less computational power to process transactions.
At that time, Bitcoin was trading at over $58,200, creating a unique scenario where lower fees coincided with a high market value.
CryptoQuant’s CEO, Ki Young Ju, recently tweeted about the ongoing miner capitulation. He advised investors to maintain a long-term bullish perspective while warning against excessive short-term risks. His insights reflect a cautious sentiment among industry experts.
Historically, miner capitulation phases end when the daily average mined value is 40% of the yearly average. Currently, it’s at 72%, suggesting that we may not be out of the woods yet. This historical marker has been a reliable indicator of market stability and recovery.
Ju predicts that the crypto markets could remain sluggish for the next 2-3 months as this phase continues. However, the long-term outlook remains positive, with potential stability and recovery on the horizon.
Do lower fees make you more likely to use Bitcoin? Let us know.
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