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Tag: Fees

  • Ethereum Transaction Fees Near Six-Month Low Amid Declining Prices

    Ethereum Transaction Fees Near Six-Month Low Amid Declining Prices

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    Ethereum gas prices have been declining for a while now. It had risen to its all-time high back in 2021 when the bull market was in full bloom. It then continued to maintain on the high spike, spiking at various intervals to high points. At its highest, average ETH gas fees were as high as $69. However, with the recent downtrend and the market losing momentum, the gas fees have crumbled and the recent decline has seen its near six-month lows.

    Ethereum Fees Are Down

    Ethereum gas fees for the last three months showed a consistent downtrend that saw average gas fees decline as low as $5.98 in early March. This had been the lowest that gas fees had been in seven months at this point. However, a spike in gas fees in early April would quickly put an end to this sending gas fees as high as $43 once more. This would prove to be only temporary given that the sharp downtrend that followed has sent ETH gas fees to plummet towards six-month lows.

    Related Reading | DeFi Stablecoin Platform Beanstalk Suffers ~$80M Hack

    As of Monday, Ethereum gas fees had declined as low as $8.78 on average. It represented a 76$% drop from its April high to put it in levels recorded in early March. The drop in ETH fees has also translated to a drop in the fees of Layer 2 rollups which boast significantly lesser fees than it costs to transact on the main network. 

    The lowest recorded fee rate had dropped to as low as $0.03 per transaction on Sunday recorded on Metis Network. Others like Loopring and Zksync had seen transaction fees slide to as low as $0.05.

    Bitcoin fees had also fallen and the average transaction fee as of early Monday sat at $1.04.

    Ethereum price chart from TradingView.com

    ETH On The Charts

    The current downtrend seems to be prominent in not just the transaction fees but the price of the digital asset. Ethereum price had crashed below $3,000 in the early hours of Monday, and while small recoveries were made, various dips saw the digital asset touch the $2,800 price range before the opening of the markets on Monday.

    Related Reading | TA: Ethereum Slides Below 3K, Why Bears Could Aim $2.5K

    With selloffs rocking the market, indicators had turned inherently bullish for the digital asset, skewing completely in favor of the sellers. After breaking the $3,000 mark, the next major support level now lies at $2,900 although bears continue their efforts to drag it down lower. 

    ETH has now fallen below the 50-day moving average. This puts the short-term forecasts of the cryptocurrency right in the negative for the majority of traders, and the long-term outlook is not looking good either. The digital asset is trading at $2,909 at the time of this writing.

    Featured image from Shrimpy Academy, chart from TradingView.com

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  • Bitcoin transaction fees hit decade lows, here’s why

    Bitcoin transaction fees hit decade lows, here’s why

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    It’s a great time to move Bitcoin (BTC) between wallets and exchanges. Bitcoin transaction fees have hit all-time lows in BTC, according to research by Galaxy Digital. 

    As shown on the graph below, the Bitcoin mean transaction fee has plummeted to 0.00004541 Bitcoin ($2.06) in 2022, while the median is 0.00001292 Bitcoin ($0.59) which is the lowest of any year except 2011, according to the report.

    Graph to show the fees trending down since 2013. Source: Galaxy Digital

    According to Alex Thorn, head of firmwide research at Galaxy Digital, a combination of growing Segwit adoption, batching transactions, growth in the Lightning Network, a collapse in miners selling and the “reduced OP_Return usage” have caused the drop in fees not seen for over a decade. 

    Lead on-chain analyst at Glassnode, James Check, agreed with Thorn, explaining to Cointelegraph that “batching and Segwit are certainly part of the mix,” because the combination will increase the number of transactions that fit in a block, and thus increase throughput and decrease fee pressure.

    He shared the following graph to show that Segwit adoption “increased significantly at the May-July lows.”

    Source: Glassnode

    Nonetheless, Check continues, “This is not the whole story…”:

    “The number one reason I believe fees are low is we had a 50% collapse in price in May which absolutely decimated retail interest.”

    He suggests that “all three [fees, active addresses and transaction counts] collapsed after the May sell-off.” 

    Fees (orange), active addresses (blue), transaction counts (purple), and BTC price (gray). Source: Glassnode.

    “This, in my view was the likely commencing of a bear market and even with the price run-up, we saw a great many people financially burned, and thus out of the market.”

    Eric Yakes, the author of The 7th Property: Bitcoin and the Monetary Revolution, told Cointelegraph, “We’re witnessing a structural change in the market dynamics and historical correlations maintain little value.” 

    Regarding the future of the network, the “$70M raised by lighting labs to build a stablecoin and asset protocol,” is a key development for the Bitcoin protocol. He added that “it’s important for transaction fees to trend lower as they are the primary limitation to scaling a network in a decentralized manner.”

    Related: Bitcoin Lightning Network growth capacity plateaus at 3,400 BTC

    Ultimately, while transaction fees are a boon for wallet admin and opening lightning channels, it could be a sign that retail interest has dried up. For Check, “look no further than ye olde Google trends to see just how popular the orange coin is right now,” suggesting that “there is near zero inflow of new users.”

    Google trends search interest for Bitcoin has trended lower since the April/May peak.

    Yakes has the last word regarding the emergence of Bitcoin:

    “Bitcoin needs the lightning network to continue its pace of growth and a thriving network of smart contract development to emerge.”