Bitcoin and Ethereum Transaction Fees Plunge to Eight-Month Low, Unstable Future Anticipated
Summary:
Bitcoin and Ethereum have reached an eight-month low in average transaction fees, with Bitcoin at $1.93, and Ethereum at $0.70. This downturn is attributed to reduced network congestion post-halving and a decrease in demand for Ordinals. While beneficial for users, miners might face a loss due to reduced income from fees. The shift in Ethereum's traffic after the March Dencun update has also played a crucial role in reducing fees. However, such a low-fee environment is speculated to be unsustainable in the long term.
Average transaction fees for Bitcoin (BTC) and Ethereum have seen a slump to $1.93 and $0.70 respectively, marking the lowest point in eight months for Bitcoin. This offers users of both cryptocurrencies an economical opportunity to relocate their funds. This dip in transaction charges is largely attributed to a decline in network congestion and the adjustment of mining activities post-halving, according to CEO and co-founder of Spark, Vitali Dervoed. While this may be good news for users, it spells a worrying situation for miners who depended on the additional income from BTC fees to offset the declining block rewards.
Adding on to Dervoed's statement, Justin d'Anethan, Keyrock's head of business development APAC, highlighted that the recent slowdown in the hype surrounding Ordinals and Runes inscriptions also had an impact on the fee reduction. In a similar vein, Flipside Crypto's Data Scientist, Carlos Mercado also mentioned the impact of Ordinals.
Interestingly, while Bitcoin's lower fees are attributed to halving and reduced demand for Ordinals, Ethereum’s fee reduction is linked to the Dencun upgrade which took place in March. Much of Ethereum's activity has now been relocated to Arbitrum, Optimism and Base in line with its intentions. The Dencun upgrade’s goal of making layer-2 activity much cheaper has resulted in users and builders moving away, thereby reducing fee rates.
However, this might not bode well for Ethereum in the long run. Mercado suggested that this shift could lead to an inflation of ETH in the long-term, thereby compromising security. With the future of the two cryptos' fees being uncertain, it remains to be seen whether their transaction count and fees will see any major modifications. Despite the demonstrated advantages of lower fees and improved scalability and technology, there is a chance that this low-fee environment may not be sustainable.
Published At
7/2/2024 4:15:00 PM
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