Bitcoin transaction fees have plunged to their lowest level in four years, reaching an average of $38.69 on July 7. This figure, last seen during the peak of the COVID-19 pandemic in 2020, highlights a significant change in the cryptocurrency landscape.
The dramatic reduction in fees occurred as Bitcoin traded above $58,200. Two primary factors contributed to this decline: decreased demand for block space and lower data volume. These changes have alleviated network pressure, resulting in reduced costs for users.
Bitcoin miners processed an impressive 673,752 transactions on July 7, with Bitcoin accounting for 89.7% of these transactions. Other protocols like Ordinals, BRC-20, and Runes comprised the remaining bandwidth. Despite the lower fees, miners maintained profitability, with miner revenue representing 1.14% of the transaction volume, consistent with the average over the past six months. The reduced network difficulty allowed miners to process transactions with less computational power, enhancing their profitability.
However, market intelligence firm CryptoQuant has noted signs of “capitulation” among Bitcoin miners. In the post-halving climate, with BTC prices nearing $50,000, profit margins have tightened. Capitulation involves reducing operational costs or selling Bitcoin holdings to survive market downturns. Analysts at CryptoQuant pointed to a significant decline in Bitcoin’s hashrate, a key indicator of miner capitulation. A 7.7% drop in hashrate mirrors conditions seen during the post-FTX collapse, often signaling potential market bottoms.
The report also highlighted that miners have been “extremely underpaid” since the halving. The miner profit/loss sustainability indicator has shown consistent underperformance, leading to a 63% decline in daily revenues. This decrease underscores the ongoing challenges faced by miners in the current market environment. While the reduction in Bitcoin fees provides relief for users, the underlying pressures on miners reveal the volatility and complexity of the cryptocurrency market.
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