The data shows that Bitcoin’s current cycle is the first in the history of the cryptocurrency to deviate from an established pattern of transaction fees.
The latest Bitcoin cycle has seen lower cumulative fees than the previous one
According to data from the on-chain analytics company glassThe cryptocurrency has seen a cumulative fee of just 53,800 BTC since the most recent halving. Halving here refers to a periodic event in which the block rewards (i.e. the rewards miners receive for solving blocks on the network) are permanently cut in half.
Halving is always very important for Bitcoin as block rewards are the only way new BTC is produced/mined, so halving tightens the production of the asset.
The halving-related narrative also holds the punch perfectly, as bull markets have followed them historically. Halvings occur approximately every four years.
Because of its frequency and importance in the market, halvings have emerged as a popular method for determining the starting and ending points of what constitutes a Bitcoin cycle or “epoch.”
In the course of the current discussion, different cryptocurrency courses were compared based on the cumulative transaction fees they observed. The “transaction fee” here is naturally the amount miners are charged for handling individual transactions.
Now, here’s a chart showing the trend in cumulative fees for each of the previous eras, as well as for the current cycle so far:
How the cumulative transaction fees for BTC has changed over the epochs | Source: Glassnode on Twitter
As you can see in the chart above, the first Bitcoin cycle saw miners earn a total of 8,890 BTC in transaction fees. The second epoch then saw this value jump by several factors, recording a fee of 38,400 BTC.
The next cycle also followed this pattern, with cumulative transaction fees once again seeing a sharp growth to the tune of 165,600 BTC. The cumulative rise in fees during these cycles makes sense, as the asset has become more adopted as the years go by, and thus transaction demand has naturally increased.
However, the recent era has deviated from this pattern, as the cumulative amount of fees received by its miners so far has not exceeded 53,800 bitcoins, which is only a third of what was seen in the last cycle.
Obviously, the current era is not over yet, so in theory, perhaps this trend will change and return to the norm. However, given that the next halving is only next year, it seems highly unlikely that cumulative fees could fill the current large gap.
As for the reason for this difference, Glassnode explains, “This drop in fees is primarily driven by improvements in transaction efficiency such as SegWit and Transaction Batching, which are largely adopted through our current era.”
Looks like the ongoing epoch is at the top | Source: Glassnode on Twitter
In terms of the dollar value of transaction fees, though, the pattern continues, with cumulative fees for the current cycle at $1.62 billion, more than any other period.
BTC price
At the time of writing, Bitcoin was trading at around $27,100, up 2% in the past week.
BTC continues to consolidate | Source: BTCUSD on TradingView
Featured image from iStock.com, charts from TradingView.com, Glassnode.com