'Boring' Bitcoin Market Sends Miners' Fee Earnings to 3-Month Low

Bitcoin's transaction activity has cooled amid the recent lull in price action – and that's hurting miners' earnings.

AccessTimeIconOct 19, 2020 at 11:30 a.m. UTC
Updated Sep 14, 2021 at 10:11 a.m. UTC
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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 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.
Bitcoin transaction count and percentage of miner revenue from fees
Bitcoin transaction count and percentage of miner revenue from fees
  • "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.
  • Daily trading volume across major exchanges fell to $804 million on Sunday.
  • That's the lowest since July 19 and down 80% from the high of $4.4 billion registered on Sept. 3, according to data source Messari.
  • 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.
Bitcoin 4-hour chart
Bitcoin 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.


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