Bitcoin Struggles for Continuity in Bull Run as Costs Drop 56% Year to Date

Bitcoin The network has been in a remarkable stagnation on the on-chain level this year. After a surge of speculative activity in 2024, the network is now exhibiting near-mechanical efficiency. The average block size has decreased, daily transaction fees are less than half of what they were in January, and the fee-to-reward ratio has fallen to levels not seen since before the start of Ordinals and Inscriptions.

Despite this cooling, the price is struggling to stay above $110.000. A closer look at the chain reveals a network that is cooling, even as the market tries to stay warm. Total daily fees have dropped from around 4,7% since January. BTC to just over 2 BTC this month, representing a 56% drop since the beginning of the year. This has direct implications for investors; a hypothetical price increase seems less likely without a substantial increase in user activity and the associated costs.

The story is further corroborated by the moving averages. Both the 30-day and 90-day exponential moving averages (EMA) have been pointing downward since March, with only sporadic increases occurring around isolated spikes in subscription activity. The fee-to-reward ratio, a key metric for how miners' income is funded, has fallen from 1,35% in the first quarter to 0,78% in the past three months. This reduction raises questions about the sustainability of miners, who are now increasingly dependent on the BTC/USD price.

This ratio is crucial because it provides insight into how Bitcoin's security is financed. When transaction fees are higher, users contribute to the cost of network maintenance. At lower fees, this burden shifts back to the subsidy created with each block. With the block capped at 3,125 BTC per block, miners' profitability increasingly depends on the BTC/USD exchange rate. While the current price of $110.000 is still profitable for miners, the dependence on this rate is transparent; a drop in price can put direct pressure on their margins.

Moreover, the on-chain silence has other consequences. The average block size has decreased by about 10% compared to the first quarter, to around 1,53 MB, while congestion in the mempool has almost disappeared, except for a few brief spikes. This is beneficial for traders, as lower, predictable fees shorten confirmation times for exchanges, ETF creations, and market makers. For individual users, this means faster transactions at lower costs. In effect, Bitcoin's base layer now functions as a low-latency settlement network instead of a congested auction.

Yet this lull poses risks for miners. Since the beginning of the year, fee volume has fallen from around $576.000 per day in the first quarter to around $410.000 now. This demonstrates that the buffer against falling prices is shrinking. If Bitcoin falls below $100.000, revenues could sharply decline, potentially leading to more leveraged risk for the spot price, especially as long as fee contributions remain low.

Despite the inconveniences, these circumstances also present an opportunity. The current state of the network is stable, predictable, and inexpensive to use. Average fees remain low, even with high throughput, meaning Bitcoin's appeal as a settlement layer remains intact. Should the market stabilize around $110.000 without new fee spikes, this could signal a new equilibrium for Bitcoin, making it a rare asset traded at the institutional level, supported by an exceptionally efficient foundation layer.

Whether this situation persists depends on demand. A renewed surge in subscription activity or a new influx of retail investors could push average fees back up to first-quarter levels. For now, however, the blockchain is quiet. The mempool is running smoothly, blocks are smaller, and the network is stable, while the price, at least for now, is showing the opposite effect.

Frequently Asked Questions

How does the current fee structure affect miners?
The decline in fee revenue makes miners more vulnerable to Bitcoin price fluctuations, prompting them to optimize operational costs.

What does a decrease in the mempool mean for investors?
Lower mempool congestion can indicate a more efficient network, which has positive implications for transactions and merchant experiences.

Is there a chance of recovery in fees?
An increase in user activity, for example through retail accessibility, could lead to rising fees and a revitalization of the on-chain economy.