Finally, after rocketing up post Halving, BTC Fees are coming back down to earth...

in GEMS4 months ago

One thing we can always count on with increased interest in BTC, higher fees...

Just like what happened back during the big bull run of late 2017, the fees went skyward yet again as we ran up to $10k into the halving.

The fees didn't get anywhere close to what we saw back in 2017, but off the low levels they were at recently, the were up hundreds of percents in a short amount of time.

But wait, wasn't segwit supposed to fix all of that?!

As we can see, segwit has certainly helped but it hasn't solved the problem, plus not everyone has upgraded to segwit addresses.

That being said... the current network fees have dropped by over 50% in the last few days and are making their way back down toward more 'reasonable' levels:

image.png

(Source: https://decrypt.co/30109/bitcoin-transactions-get-50-cheaper-as-network-recovers)

That being said, we are still more than triple where we were a couple months pre-halving.

Things continue to settle down post halving...

The fees aren't the only thing that are going to take some time to fully settle in post halving.

After getting up near all time highs prior to the halving, the network hashrate has fallen some 30% plus since the halving as well:

image.png

(Source: https://cryptonews.com/news/bitcoin-fees-drop-but-still-remain-far-from-the-pre-halving-6645.htm)

With a 30% drop in hashrate and only a 6% drop in difficulty thus far, we can expect another difficulty adjustment to the downside in the near future.

Possibly two of em.

Miners are desperately in need of a few difficulty adjustment downards as the average cost of producing a bitcoin currently is estimated to be around $12k, which means a large percentage of miners are currently operating in the red.

Light at the end of the tunnel...

On the positive side, the mempool is finally working its way through its backlog of orders which means the network is finally getting less bloated, which is also why fees are dropping...

image.png

(Source: https://decrypt.co/30109/bitcoin-transactions-get-50-cheaper-as-network-recovers)

We have seen more than a 70% drop in the last several days as the backlog is finally getting worked through.

I think in a few more weeks we are going to be mostly on the other side of the BTC halving adjustments and BTC should mostly be back to 'normal'.

That is, until the next flood of activity and price increase in BTC that again causes network congestion and high network fees. :)

Which underscores why bitcoin doesn't work as an every day currency, but works fine as digital gold.

Stay informed my friends.

-Doc