Transaction costs for Bitcoin have dropped by 50 percent within five days as the pile-up of transactions the Bitcoin Network has started to reduce. This is a quick reversal for Bitcoin, which saw transaction fees rise by more than 2,000 percent in 2020 alone.
According to data from Bitinfocharts, the average bitcoin transaction cost has plummeted by 53 percent. The average bitcoin transaction fell from $6.64 to $3.06 in five days. See the following chart.
Drop in number of transactions brought down the Bitcoin transaction costs
The abrupt drop in bitcoin transaction fee follows a sharp fall in the number of unverified transactions accumulated in the Bitcoin mempool (where unverified transactions are held awaiting network confirmation).The Bitcoin mempool can be measured in raw figures or in megabytes of data.
The number of bitcoin transactions sitting in the Bitcoin mempool have reduced by a massive 71 percent over the last five days, as per Blockchain.com data. Moreover, despite the substantial reduction in the number of clogged transactions, the size of the Bitcoin mempool remains significantly high.
Low BTC transaction rate
Currently, the Bitcoin mempool is clogged with 60MBs of transactions compared to its previous high of 90MBs on May 20. Given that the Bitcoin Network produces ten blocks every ten minutes, the Bitcoin mempool could dwindle in just over 10 hours.
Overall, the number of Bitcoin transactions has fallen drastically. The data by Blockchain.com assumes a low bitcoin transaction rate. In fact, since May 11, when the block rewards halving even took place, the number of bitcoin transactions have dropped by 37 percent. As per data shared by Bitinfocharts. Although the cost of transacting bitcoin is dropping, it is not a good sign when the number of transactions is decreasing as well.