Bitcoin Transaction Fees Surge Post-Halving, Thanks to Rune

On April 20th, during the Bitcoin Halving Event, there was a surge in Bitcoin transaction fees, peaking at $128. The introduction of the Runes Protocol, a new token standard akin to BRC-20s, caused a spike in transaction fees as people raced to create meme coins.

The creators of Rune timed their protocol’s launch on the Bitcoin blockchain to coincide with the halving block number 840,000 to boost its on-chain activity. Unfortunately, this gimmick caused so much congestion on the Bitcoin network causing the fees to soar to their highest level ever

For context, On April 20, the total daily transaction fees for Bitcoin rose to $81 million, up from $7.7 million the day before. The network’s total fees dropped to $22.37 million on April 21. During the Halving Event, 37.7 Bitcoins, valued at $2.4 million, were rewarded to a miner of the block number 840,000.

Once the Rune madness started to cool off, Bitcoin transaction fees fell to manageable levels the following day.

Sudden Surge Fails to Offset Post-Halving Miner Fee Slash

The recent Bitcoin halving event was expected to lower block rewards for miners by 50%, significantly lowering their rewards. However, the introduction of Casey Rodarmor’s Runes protocol seemed like it could help mitigate this by counterbalancing the loss with increased transaction fees. The new protocol was created for minting digital tokens on the Bitcoin blockchain. It became extremely popular soon after launch, causing unprecedented network congestion and skyrocketing transaction fees. However, the hype was short-lived and so was Bitcoin’s on-chain activity that quickly returned back to normalcy.

Even though the overall amount of Bitcoin transaction fees reached 1,258 BTC, there has been a little decline from the most recent peak. Mempool data shows that the average transaction fee is currently 34.86, down from a high of 128.45 on April 20. This decrease reflects a 72.86% decrease from Saturday, but it also reflects a remarkable 2.65K% increase from a year ago.

The average Bitcoin transaction fee tends to rise during times of network congestion, like the 2017 cryptocurrency boom, and can almost exceed $60 USD. Nonetheless, it’s possible that the high transaction costs are discouraging prospective new users from joining the network, which explains the decline in newly created Bitcoin addresses.

Bitcoin’s market reaction to the highly anticipated halving event was muted, but it has subsequently gathered momentum. Bitcoin is currently trading at $66,178, up 1.76% from the previous intraday trading session, according to statistics from CoinMarketCap.

Looking Forward

Bitcoin’s market reaction to the highly anticipated halving event has been largely subdued, but it has since started to gain momentum. Long-term expectations for Bitcoin still remain bullish, despite market analysts warning investors about a possible price drop following the halving.

When analyzing the price trajectory of Bitcoin, previous trends are crucial to keep in mind. According to historical cycles, Bitcoin has slightly falls in value right after the halving and then sees large increases in value the following year. For example, following the 2012 halving, the price of Bitcoin increased by 9% in the month that followed, but it increased by an astounding 8,839% over the course of the next year. This trend was further supported by the observation of similar patterns following the 2020 and 2016 halvings.

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