Transaction charges for Bitcoin are typically an indication of how holders move their coins. When the network is congested by a large number of Bitcoin transactions, the transaction charges increase, indicating a high network traffic volume. When prices of the digital asset increase, transaction traffic is usually high on bull markets. This usually leads to a sale as investors try to take advantage of it.
One thing, it was anything but usual on this new bull market. This bull market has not produced so many normal things around bull markets. An example of this is the decline in exchange reserves. Bitcoin would often cause the exchange reserves to be increased with the bull market because investors try to sell their coins. But it was the other way around this bull market. Devices have plummeted, and Bitcoin’s transaction fees are down one year, indicating that investors conduct fewer transactions on the blockchain.
Bitcoin Transaction fees are reducing
The current Bitcoin transaction fee environment has reached levels not seen since last year. Fees that had skyrocketed following the massive exodus of miners from China have now returned to pre-2021 levels. Due to competition for block space as a result of the reduced hashrate, bitcoin transaction fees increased by approximately 50% in July 2021. However, as miners have returned to the network and hashrate has increased, network fees have decreased once more.
Current network activity indicates that there is less demand for blockchain block space. This is unique in that demand for block space is typically highest during bull markets. The last two bull markets have all followed similar patterns. During previous bull markets, Bitcoin transaction volumes increased, causing a greater demand for block space and, as a result, higher transaction fees.
At the moment, the average transaction fee for bitcoin transactions is $3. The average transaction fee has not been this low since October of last year when it was $3. In April, when the bull market was in full swing, the average transaction fee was $61. As investors moved their assets around, competition for block space was fierce.
How Does This Affect the Bitcoin Price?
The price of a digital asset, like any other asset, is determined by demand. Given the current transaction fees and transaction volumes, this demonstrates that investors are not moving a large portion of their digital assets. As a result, it points to a stronger hold sentiment among investors. This could mean that the bull market will continue. Perhaps one more bull run before the market succumbs to the bears.
When it comes to the price of a digital asset, hold sentiment has always been important. This demonstrates that bitcoin investors are more likely to buy more coins rather than sell their current holdings. As a result, there is scarcity in the market, as evidenced by decreased exchange reserves, which have also reached one-year lows. Scarcity inadvertently raises the value of an asset. Playing with economic fundamentals.
Bitcoin is currently worth more than $48,000. After a successful test of the $48,000 resistance level, the asset climbed $400 above it before losing hold and falling back below it. Indicators continue to show a positive upward trend in the asset’s price. By the end of the midweek trading day, the market could be in the green.