Overview

Amidst a challenging week for the cryptocurrency sector in 2024, the transaction fees for Bitcoin and Ethereum have dropped significantly to their lowest points in recent months. On June 23, the average cost of a Bitcoin transaction hit $1.93 per transaction, the lowest since October 2023. This decline in fees reflects a decrease in network activity and competition on the Bitcoin network.

Decreased Interest in Bitcoin Network

Transaction fees on the Bitcoin network tend to increase during periods of high market volatility, especially when prices are rising. The surge in price speculation creates more competition for block space, leading to higher transaction fees. Historically, almost every major bull run of Bitcoin, with the exception of the 2021 surge when fees remained relatively low despite the price reaching $69,000, has been accompanied by a rise in transaction fees.

Recent Developments in the Ethereum Ecosystem

Similarly, transaction fees within the Ethereum ecosystem have hit a new low, with fees dropping to 1 gwei, the lowest level in recent years. Currently, the gwei level on the Ethereum network stands at 4.5. Gwei is a unit of Ethereum used for transactions within the network and represents one-billionth of an Ethereum.

The decrease in Ethereum transaction fees is attributed to the migration of activities from the main Ethereum layer to the Layer-2 network following the Dencun upgrade in March. Since the upgrade, average gas prices on Ethereum have plummeted by around 92%. A report by Layer2 Insider indicates that Layer-2 networks generated $950,000 in revenue last week.

Market Downturn

These reduced transaction fees on the top two cryptocurrency networks coincide with one of the most challenging weeks for the crypto market in 2024. Bitcoin's price fell below the $63,000 support level, and several altcoins experienced considerable double-digit losses. Despite the recent market turbulence, the cryptocurrency market has witnessed substantial growth over the past six months, with leading cryptocurrencies like Bitcoin and various altcoins achieving new all-time highs.