Bitcoin, Ethereum Fees Move in Opposite Directions as ETH Becomes Inflationary Again
Bitcoin (BTC) transaction fees are on the rise for the first time since October as activity on the network has started to pick up. Meanwhile, fees on the Ethereum (ETH) network are moving in the opposite direction, decreasing the burning of ETH tokens as a result, according crypto analytics provider CryptoCompare.
The fees paid to make transactions on the Bitcoin network broke a four-month downtrend in March, increasing by 18.3% for the month to a total of USD 15.2m, CryptoCompare’s latest report said.
It added that for each transaction, the average fee stood at USD 1.91, marking an increase for the month of USD 1.84.
The rise in fees paid in March came along with an increase in the use of the network. According to the report, March saw 7.98m on-chain transactions processed on the bitcoin network, the largest monthly number of transactions so far in 2022.
Bitcoin daily transaction count and price:
Meanwhile, Ethereum saw a decline in both the fees and the number of transactions processed on its network.
“Ethereum fees have continued to fall, this time sharply declining 37.0% down to a total of USD 424mn,” the report said. It also described the reduction in average fees paid per transaction as “a steep decline,” noting that they have fallen from USD 21.25 in February to USD 12.13 in the last month.
Notably, the lower fees paid to make transactions on Ethereum also mean that fewer ETH are being burned through a mechanism that takes a portion of the ETH tokens paid for transactions out of circulation.
The mechanism, introduced with the EIP-1559 upgrade in August last year, has been credited with making the supply of ETH deflationary at times, thus theoretically boosting the value of each circulating token.
Now, however, CryptoCompare said that the lower fees have brought the average number of ETH tokens burned daily down 49.5% for the month to ETH 3,827. “The network was thus inflationary for the whole month of March with the average daily block rewards at 13.5k ETH,” the report said.
At 14:03 UTC on Thursday, BTC is trading at USD 40,600, unchanged in a day and down nearly 6% in a week. At the same time, ETH is changing hands at USD 3,052, down 1% in a day and nearly 4% in a week.
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