‘Boring’ Bitcoin Market Sends Miners’ Fee Earnings to 3-Month Low
‘Boring’ Bitcoin Market Sends Miners’ Fee Earnings to 3-Month Low
Bitcoin’s (BTC) on-chain transaction activity has cooled amid the recent lull in price action – and that’s hurting miners’ earnings.
- The cryptocurrency’s blockchain processed 231,437 transactions on Oct. 18 – the lowest since May 24, according to data provided by blockchain analytics firm Glassnode.
- That means the daily transaction count was down nearly 40% from a peak of 382,408 observed on July 1.
- With network processing far fewer transactions currently, the percentage of miners’ revenue derived from fees also dropped to a three-month low of 3.49% over the weekend.
- Last week, CoinDesk reported that the bitcoin’s hashrate had hit a new high as a record amount of computing power was applied to mining on the network.
- The slide in the tally of transactions is the result of the cryptocurrency’s low-volatility trading of late, and may have bullish implications for price, according to analysts.
- “Boring price action and low volatility tends to reduce the count of transactions to and from the exchanges,” Willy Woo, on-chain analyst and author of “The Bitcoin Forecast” newsletter, told CoinDesk over Telegram.
- Exchanges typically liquidate bitcoin earned through trading fees to pay salaries and finance other expenses.
- But with fewer transactions bringing in less in fees, Woo said, the exchange supply tends to drop, thus reducing selling pressure in the market.
- Bitcoin is now trading in the range of $11,200 to $11,700 for the seventh straight day, according to CoinDesk’s Bitcoin Price Index.
- Previously, the cryptocurrency had consolidated in a narrowing price range below $11,000 for four weeks before establishing a foothold above the psychological hurdle on Oct. 10.
- Joel Kruger, a currency strategist at LMAX Digital, also said the transactions drop is reflective of sideways, directionless price action.
- The combination of low volatility and pullback in transaction count often creates bullish conditions for prices, according to Woo.
- At press time, bitcoin is changing hands near $11,480, down 0.38% on the day.
- Prices are pushing at the upper bounds of a descending triangle on the 4-hour chart.
- A breakout would imply a resumption of the rally from the Oct. 8 lows near $10,500 and shift the focus to $12,000.
- The cryptocurrency has recently shown resilience to exchange-related issues and heightened uncertainty in traditional markets. As such, the odds appear stacked in favor of a breakout.
- Disclosure: The author holds small positions in bitcoin and litecoin.
