Bitcoin Transaction Fees Plunge After Halving, but Sideways Trading Lies Ahead

Following Bitcoin's third halving, network fees skyrocketed to $128 per transaction, but have since plummeted to $9-$10. The surge in fees was driven by increased demand from meme coins and NFTs, with block 840,000 becoming the most expensive in Bitcoin's history. Despite the high fees, Bitcoin's price has remained stable, and analysts predict a period of sideways trading in the coming months, with miners potentially selling $5 billion worth of BTC to compensate for lost revenue.

Bitcoin Network Fees Plummet Post-Halving, But Sideways Trading Looms

Days after reaching a record daily average of $128 during Bitcoin's fourth halving on April 20, network fees have experienced a significant decline. As of April 22, the average fee for a medium-priority transaction stands between $9 and $10, according to mempool.space.

Fees Soar, Then Subside

In the lead-up to the halving, Bitcoin's network fees skyrocketed to over 24 times that of Ethereum. During the halving itself, the network processed approximately $78.3 million in fees, as per data from Crypto Fees.

Block 840,000 emerged as the most coveted block in Bitcoin's history, with an astonishing 37.7 Bitcoin worth $2.4 million paid to miner ViaBTC. The surge in demand was primarily driven by enthusiasts eager to mint rare satoshis using the Runes protocol, a novel token standard introduced during the halving block.

This block alone accommodated 3,050 transactions, propelling the average network fee to an elevated $800. The above-normal fees persisted until block number 840,200.

BTC Price Stagnates, Sideways Trading Predicted

Despite the surge in transaction fees, Bitcoin's price has remained relatively flat. In the past 24 hours, BTC has gained over 1% to trade at $66,167.52. This modest increase salvaged its weekly performance from dipping into negative territory.

Analysts at 10X Research anticipate continued sideways trading for Bitcoin, with the broader market facing a potential "six-month lull." They suggest that Bitcoin miners may liquidate up to $5 billion in Bitcoin in the coming weeks to compensate for lost revenue.

The surge in network fees during the halving temporarily mitigated the halving's impact on miners. However, with fees now subsiding, miners may resort to selling their holdings to avoid a sharp decline in their income. Markus Thielen, head of research at 10X Research, highlighted this possibility in an April 13 research note.

Conclusion

Bitcoin's network fees have experienced a dramatic decline post-halving, while the cryptocurrency's price remains relatively stagnant. Analysts predict sideways trading in the near term, citing the potential for miner liquidations and the broader market's risk of a prolonged lull.