BitInfoCharts data reveals that Bitcoin (BTC) transaction fees have increased again; accumulating a growth of more than 255% during the last 30 days until October 26. What has been generating this?
Bitcoin experiences high fees
A little over a month ago, on September 20, BTC’s transaction fees stood at $ 1.39. This compared to the $ 5.76 that was recorded during the day yesterday.
Accordingly, we can note that based on data from BitInfoCharts, Bitcoin transaction fees have increased at an unmatched rate.
On October 22 it cost an average of USD 6.3 to process a transaction on the Bitcoin Blockchain; level that the market had not experienced since August 6.
Also, today Glassnode reported on Twitter that the percentage of revenue that BTC miners get from transaction fees increased to 22.25% in the last 24 hours; a level we haven’t seen since January 2018.
Does the price increase offer an explanation?
Soon the recent price surge that Bitcoin has experienced could be one of the main catalysts behind the rate hike.
In general we could say that when prices rise, investors get excited and enter a state of mind characterized by the FOMO.
The consequence of the above is that it leads investors to be willing to pay a higher fee to BTC miners as long as their transactions take place earlier than others. And, consequently, congestion is generated in the network that leads to higher average rates.
In this sense, let us remember that on October 6 the price of Bitcoin was located at approximately USD 10,600. However, last week the leading crypto received a boost that placed it above $ 13,000.
Is Bitcoin the most desired asset?
This possible explanation goes very hand in hand with the previous one and is that the price increase has been a catalyst for the interest generated by the cryptocurrency.
In recent months we have reported from CryptoTrend how institutional investors have entered the Bitcoin market, considering it a haven for the global economic context.
Just yesterday the stock market was stained red as a result of the tensions in the United States; meanwhile Bitcoin and its investors were very calm as the crypto held onto $ 13,000.
Obviously, situations like those of yesterday have improved the perception that investors and, even, that Wall Street, has about the leading crypto.
In this way, we have investors eager to enter the Bitcoin paradise and that results in congestion in the network that produces increases in rates.
End of the rainy season in China
Another fundamental explanation that joins the previously explained is the end of the rainy season in China.
Remember that China’s summer rainy season usually lasts from June to October; This provides excess resources for hydroelectric power plants and consequently the electricity prices are cheaper and it is attractive to Bitcoin miners.
However, once the season is over and prices return to their levels, Bitcoin miners turn off their machines and look for other sources of electricity that are cheaper.
Among other things, this situation could cause some miners to access energy sources that are not so stable, causing the frequency of mined blocks to decrease until the difficulty adjustment occurs.
An interesting fact is that according to data from BitInfoCharts, the time per block of Bitcoin has increased since October 17; currently it takes approximately 13 minutes per block.
In fact, the difficulty adjustment is expected to occur at the end of this week and, with it, the network congestion will lighten.
Thomas Heller yesterday shared on Twitter his estimates for a 7.4% to 8.8% decline for Bitcoin’s difficulty. If the estimates are met, it would be the second largest negative adjustment in 2020 after the fall that followed Black Thursday.