Bitcoin's Blockspace Price Hits All-Time Low Amid Record High Price

Bitcoin hits a new all-time high of $122,000, but on-chain activity sinks to a multi-year low. Transaction fees persist at a low level, with some users bidding for less than a single satoshi. The average transaction fee per BTC transaction is less than $1.19, and demand for blockspace has bottomed out to its worst average rate in years. Some node operators are manually overriding their minimum fee acceptance rate to allow users to bid for less than a single satoshi.

Bitcoin (BTC) has reached a new all-time high of $122,000, marking a significant milestone in the cryptocurrency's history. However, this remarkable price increase has not been accompanied by a corresponding surge in on-chain activity. On the contrary, on-chain activity has sunk to a multi-year low, with transaction fees remaining at a persistently low level.

Despite the high price, demand for blockspace has significantly decreased, with users bidding for less than a single satoshi for transactions. The average transaction fee per BTC transaction is currently less than $1.19, including all types of bids. This low fee rate has led some node operators to manually override their minimum fee acceptance rate to allow users to bid even lower fees [1].

The Bitcoin protocol itself accepts transactions with any bid amount, including zero-fee transactions. However, miners typically choose transactions from major mempools, such as the default Bitcoin Core mempool. The current mempool is almost completely empty, and the percentage of miner revenue coming from fees is down to a fraction of a percent [1].

Some developers have proposed lowering the default minimum fee per virtual byte (vByte) in Bitcoin Core software. Currently, the default value is set at one satoshi per vByte, but developers are considering lowering this rate to as low as $0.05 per vByte. This change would require a modification of the minRelayTxFee variable within the Bitcoin Core software [1].

The low demand for blockspace and the resulting low transaction fees have led some to question the sustainability of the Bitcoin network. However, it is essential to note that the Bitcoin protocol itself remains robust and secure, even with the current low transaction fees. The low fees and high price of Bitcoin may indicate a shift in user behavior, with users preferring to hold Bitcoin rather than transact on the network.

In conclusion, while Bitcoin has reached a new all-time high, the on-chain activity and transaction fees remain at low levels. This situation highlights the complex dynamics of the Bitcoin network and the need for ongoing development and adaptation to meet the evolving needs of users.

References:
[1] https://protos.com/bitcoin-hits-122k-but-onchain-activity-sinks-to-multi-year-low/
[2] https://cointelegraph.com/news/satoshi-nakamoto-11th-richest-billionaire-bitcoin-holdings?utm_campaign=rss_partner_inbound&utm_medium=rss&utm_source=rss_feed
[3] https://zycrypto.com/bitcoin-nosedives-under-117000-as-enormous-og-whale-cashes-out-2-billion-btc-after-14-year-hodl/