Bitcoin Network Facing Downturn In Fees And Transactions

Bitcoin Network Facing Downturn In Fees And Transactions

Since January 28th, 2024, there has been a significant decline in the volume of daily transactions recorded on the Bitcoin Network.

The numbers declined from peaks of more than 600,000 transactions per day to less than 300,000 transactions.

This downturn is in line with a decline in the daily creation of Ordinal inscriptions, which has led to an overall reduction in on-chain fees and has eased congestion.

The slowdown

According to the data obtained on February 17th, 2024, the total number of transactions processed by Bitcoin miners in a 24-hour time frame stood at 327,713.

The daily transaction activity has seen a decline in February, it is a stark contrast to the daily transactions recorded on January 28th, 2024 of about 636,523.

From then on, there has been a gradual decline in transaction volume, on February 6th, they recorded a monthly low of about 278,098.

Ordinal transactions have also shown a similar trend, as they have experienced reduced activity throughout the month.

On February 3rd, more than 300,000 inscriptions were created in just 24 hours, but since then, the number of inscriptions has recorded a significant downturn.

Only three days later, there had been a huge decline that saw only 35,814 new inscriptions created in a day.

The impact

The decline in inscriptions has led to fewer transactions on the network and this has resulted in a decline in the fees that miners had enjoyed in December 2023 and January 2024 because of the rise in demand for block space.

There has been some relief for miners this month as mempool congestion has reduced. On February 9th, unconfirmed transactions had stood at over 200,000, but they have now dropped to 139,625.

Due to the reduced activity, there has been a significant decline in the average transaction fee. On February 3rd, it reached a high of $14.81, but it now stands at $4.56 per transaction.

There has also been a decline in the median BTC transaction fee, as it dropped from $4.16 per transaction to $1.75.

The collection

Even though there has been a decline, it has not stopped miners from collecting about $816 million this month, with on-chain transaction fees contributing more than $47 million.

Moreover, there has also been a decrease in hash price from its peak on February 14th of $92 to its current value of $82.

The shift in the transaction landscape of the Bitcoin network points towards a potential recalibration in the network’s economy, as both daily activity and fees have declined.

As users benefit from reduced fees and miners adjust to lower earnings, it is possible that the ecosystem might enter a new phase of stabilization.

With less than 9,000 blocks remaining until the next halving event, the increase in demand for block space, the increase in Ordinal inscriptions, and higher fees have become important factors.

They have kept bitcoin miners interested and this support might prove to be crucial because miners will see their revenues reduced by half in April when the halving happens.