Bitcoin and Ethereum Hit by Market Downturn: Declining Fees Raise Concerns
January 29, 2024
As the crypto market navigates recent downturns, Bitcoin and Ethereum have experienced a significant hit, with transaction fees plummeting more than 30%. Blockchain analytics firm IntoTheBlock reveals that both major cryptocurrencies saw a contraction in money paid by users for on-chain transactions, raising concerns about lower demand and adoption.
In the wake of the recent market downturn, Bitcoin and Ethereum have faced significant challenges, with transaction fees on major blockchain networks plummeting by more than 30%. This decline sparks concerns about lower demand and adoption, reflecting a shift in user behavior amid market uncertainties.
Transaction Fees Take a Nosedive
Blockchain analytics firm IntoTheBlock reports a drastic reduction in transaction fees for both Bitcoin and Ethereum, with Bitcoin experiencing nearly a 40% decrease in fees collected over the past week. The drop is attributed to a decrease in market volatility, leading users to be less eager to validate transactions and bid up fees.
Santiment’s data, analyzed by AMBCrypto, further reveals a substantial reduction in Bitcoin’s transaction count over the last seven days. Daily transactions hit a three-month low of around 340,000 on January 25th, marking a 30% decline from the previous week.
Network Congestion Eases
Simultaneously, the average transaction fees continued their downward trend throughout the month. From $15.83 on January 14th, mean fees fell by an impressive 70%, settling at $4.58 at press time. These indicators suggest reduced congestion on the network, aligning with earlier findings.
Interestingly, despite the drop in transaction fees, miners did not seem to bear the brunt. Total miner earnings, inclusive of fixed block rewards, spiked by 35% in the last 10 days, offering a silver lining amid market uncertainties.
Bitcoin’s Bumpy Ride
Bitcoin, the flagship cryptocurrency, witnessed a rollercoaster ride as it ascended to $42,000 at the start of the weekend, marking the first such instance in over a week. This surge resulted in a 4% gain within 24 hours, reversing losses incurred throughout the week.
However, the broader picture suggests a 14.5% loss in Bitcoin’s value since the regulatory approval of spot ETFs trading in the U.S. Much of the blame has been directed at outflows from the Grayscale Bitcoin Trust ETF, but a recent report by CoinShares indicates that macroeconomic factors have also played a role in the downturn.
“We think recent declines in the probability for a rate cut in March have also negatively impacted Bitcoin prices. Digital asset investors should keep an eye on the bigger picture and closely monitor FED comments in the next few months,” cautions CoinShares in their report.
As the crypto market navigates these challenges, the evolving landscape prompts a closer examination of the interplay between transaction fees, network dynamics, and broader economic factors shaping the future of digital assets.As Bitcoin and Ethereum grapple with reduced transaction fees and broader market challenges, the crypto community is on the lookout for signs of recovery. Miners seem resilient, but the overall market sentiment remains sensitive to macroeconomic factors. The recent bounce in Bitcoin’s value provides a glimmer of hope, but uncertainties persist as investors cautiously navigate the ever-evolving landscape of digital assets.
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Nashi Sakamoto, a dedicated crypto journalist from the Virgin Islands, brings expert analysis and insight into the ever-evolving world of cryptocurrencies and blockchain technology.
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