Bitcoin Price Is Surging Ahead of Halving, But Network Fees Aren't Keeping Pace

Bitcoin’s price is hitting highs not reached since 2021 as the long-awaited halving event fast approaches. But the cost to send the digital currency isn’t keeping pace. In fact, it’s down substantially compared to late last year when the price was lower.

BitInfoCharts data shows that the average cost today to send Bitcoin stands at $7.01 worth of BTC. Just two months ago, in December, the average transaction soared as high as $37 as investors snapped up Bitcoin’s NFT-like Ordinals. 

Ordinals, which allow non-financial data such as art or text to be inscribed onto the Bitcoin blockchain, are still hot—but BTC transaction fees remain modest. 

Transaction fees tend to increase when the network is busy. So why aren’t they as high now?

For a start, Ordinals activity isn’t as high as it was in December. Ordinals trading is at a fraction of what it was two months ago, despite apparently rising again. In December, trades hit a daily volume tally of $85 million. Now, that figure stands at $15.4 million, according to CryptoSlam. 

Also, there isn’t a lot of on-chain activity now. Most of the action is happening as traders buy from the newly approved exchange-traded funds (ETFs)—which already have bought up huge amounts of BTC to keep up with demand. This means the network isn’t as busy as it would be if people were sending each other as much actual BTC as opposed to ETF shares representing exposure to Bitcoin.

Miners, who confirm transactions on the blockchain, charge more for people who want to send and receive BTC when the network is busy. 

In April, the halving event will mean that miners will have their rewards slashed in half for the work they do: Instead of 6.25 BTC for each block they process, they’ll be given 3.125 BTC. That means they’ll have to work harder to make the same amount of Bitcoin.

The highest price to send BTC ever was back in April 2021, during the last bull run: The average transaction cost stood at $62.77 at the time.

BTC is now trading for $60,452, and surged as high as $63,636 earlier today—a level not reached since 2021. As we enter another bull run, will the price continue to stay low? And crucially, will transaction fees remain well under the peak?

Edited by Andrew Hayward