Bitcoin Bear Market is sending on-chain metrics to a sideways trend

The data shows that the Bitcoin Bear environment has caused the market to become inactive as transaction fees remain extremely low.

Bitcoin on-chain activity remains low as price action remains unchanged

According to the latest weekly report from Arcane Research, last week saw the lowest average daily transaction fees since April 2020.

A “transaction fee” is the amount that senders have to attach to their transactions whenever a transfer is made on the Bitcoin blockchain.

This is one of the two sources of revenue for miners (the other being fixed block rewards), therefore, they handle transactions with higher fees first.

The BTC network has an upper limit on the number of transactions that can be handled in a single day, so whenever there is a lot of investor activity, the chain gets clogged.

Those investors who don’t want to wait for their transfers to go through, just attach above average fees to their transactions.

Some other investors may similarly now try to beat those senders who set high fees and in this way average fees can explode.

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However, in times of little activity, there is no incentive for investors to opt for higher fees and the average remains low.

Now, here is a table showing how different metrics related to the Bitcoin network have changed over the past seven days:

The value of the fees per day seems to have plunged 10% over the past week | Source: Arcane Research's The Weekly Update - Week 26, 2022

As you can see above, daily transaction volume has only been around $4 billion recently, a value that has typically been $6 billion over the past year.

Bitcoin daily fees are down more than 10% over the past week as the metric is now worth around 279K. This is the lowest average daily fee since April 2020.

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The historically low activity on the blockchain is likely due to senseless price activity during this bear market that is causing investors to lose interest in cryptocurrencies.

The report indicates that the number of active Bitcoin addresses has also continued to decline over the past week.

BTC price

At the time of writing, Bitcoin price is hovering around $20.1K, up 0.3% in the past seven days. Over the past month, the cryptocurrency has lost 33% of its value.

The chart below shows the currency price trend over the past five days.

Looks like the value of the crypto has surged up over the last few days | Source: BTCUSD on TradingView

Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Arcane Research