• Wed. Jun 22nd, 2022

Crypto bloodbath: Bitcoin network transactions and fees rise as selloff continues

ByHazel R. Lang

May 10, 2022

The number of transactions on the Bitcoin network has increased over the past week, and blockchain analytics firm Glassnode says these are “urgent” transactions as investors de-risk their current positions. .

A sudden influx of 42,800 transactions hit the Bitcoin (BTC) mempool last week. Glassnode’s chief analyst says these were likely “rush” transactions due to the high amount of fees paid per transaction. The average fee rose to $2.72 last week, about 15% higher than the usual average according to bitinfocharts, an on-chain data tracker.

The mempool on a blockchain network is where transactions are sent before being confirmed in a block. The higher the fees paid on a transaction, the higher the likelihood that it will be chosen before others.

Read: IMF warns Central African Republic against adopting Bitcoin

What you should know

Glassnode explained that investors paid higher than average fees, likely in order to prioritize their offerings to reduce portfolio risk or add collateral to their margin positions, as the price of BTC fell 19% in the past. course of the last seven days.

  • Just over 15% of fees paid for on-chain transactions correlated to exchange deposit rates, and these were only higher in May 2021 during another period of strong sales.
  • BTC inflows to exchanges exceeded inflows for most of 2022, but that changed last week as there were over $50 million more inflows than outflows.
  • Glassnode said the full amount of trade-related volume was only exceeded last October and November and was consistent with the peak of the 2017 bull market in late December and early January 2018.
  • Glassnode also noted that BTC accumulation has been on a low trend since mid-April. The “shrimps” who hold less than a whole bitcoin were the biggest accumulators of any cohort of wallets down to the whales over the past week, but even their accumulated strength was weak compared to previous months this year.
  • The largest distributors, or sellers, were those in the highest cohort who held at least 10,000 coins. According to Glassnode, distribution has been greater than accumulation for most of 2022, however, the largest accumulators have been those holding less than one BTC all the way up to those holding 10.

Read: There are 2 million bitcoins left to mine, as investors brace for market volatility

With total fees being spent locally high as investors urgently try to exit more volatile positions, it looks like Bitcoin markets could continue on their “rocky path” towards capitulation. The reason we are seeing these levels of sell-offs is because investors are turning to the safe-haven currency, the US Dollar, following policy decisions made by the US Fed. The Fed last week raised its interest rate to 1%, the biggest increase since 2000, as it delivered its policy decision last week on Wednesday.

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