Bitcoin transaction fees have just dropped to the lowest level in over a decade, reflecting a decline in demand in the Blockchain market.
This occurs in the context of investors starting to diversify their portfolios into altcoins, but long-term confidence in Bitcoin remains strong.
MAIN CONTENT
Bitcoin transaction fees have hit a 10-year low, indicating a clear decline in network usage demand.
On-chain data and market trends show that investors are shifting capital to altcoins to optimize short-term profits.
Despite the shift, outflows from exchanges still reflect a strong long-term confidence in Bitcoin.
What is the recent record low Bitcoin transaction fee?
According to Glassnode data, the average daily transaction fee for Bitcoin has dropped to 3.5 BTC, the lowest level since late 2011. This reflects a slowdown in activities on the Bitcoin network in recent times.
Data from Glassnode shows that this transaction fee is measured on a 14-day average basis. Such low fees have only occurred at the early formation stage of Bitcoin. Specifically, in the past 10 years, the network has never recorded fees as low as they are now. This is a direct indicator that the demand for using block space has decreased, while on-chain money transfer activities have markedly reduced.
This reduced volatility partly explains the 'calm' state of the Bitcoin market, while also indicating structural changes in how investors use and trade Bitcoin in the current context.
What caused Bitcoin transaction fees to drop so drastically?
The drop in transaction fees primarily stems from weak network usage demand, with on-chain coin transfers cooling down. When fewer people compete for block space, transaction fees are pulled down to minimal levels.
Real market data shows that the number of new transactions is decreasing, and the block confirmation speed is not fluctuating significantly, reflecting a decline in demand for using Bitcoin for buying and transferring in recent weeks. The lack of significant events, fewer attention-grabbing news, and investors temporarily choosing to observe have also contributed to the 'downturn' in trading activity.
According to a report from Glassnode, this situation resembles the late 2011 phase when the market was small, cash flow was weak, and trading momentum was limited. This reflects a familiar cyclical pattern as the market enters a correction or accumulation phase.
How does the sign of portfolio diversification appear?
Alongside the drop in transaction fees, data from AMBCrypto based on CryptoQuant's report shows that the number of active sending addresses for Bitcoin has surged in the past 48 hours. This reflects a restructuring of portfolios or asset conversion on the part of investors.
The increase in the number of sending addresses is often a signal that investors are transferring Bitcoin out of personal wallets, often to rebalance their portfolios or seek new profit opportunities. This coincides with many altcoins recording strong price growth in the same period, indicating that cash flow is being rotated from Bitcoin to smaller-cap coins to optimize short-term profits.
The active capital movement by investors is supported by low transaction cost data, which reduces transaction costs, and the attractiveness of altcoins when they are highly volatile, potentially yielding better short-term returns.
What reasons attract capital flows to altcoins?
Altcoins have recorded significant price growth in the past 48 hours, outperforming Bitcoin in the same period. This leads investors to shift capital into altcoins in search of higher profits.
Investors often shift capital to altcoins when Bitcoin price volatility weakens, to take advantage of better short-term profit opportunities.
– CryptoQuant, June 2024 Cryptocurrency Market Report
The record growth of many altcoins has intensified the trend of capital movement. This clearly illustrates the popular asset rotation strategy of investors to optimize profitability in different market phases. Additionally, the low conversion fees between cryptocurrencies at this time also facilitate these actions.
What does the outflow on exchanges indicate?
Alongside these movements, exchanges have recorded a significant increase in Bitcoin outflows over the past week. According to on-chain experts, this is a sign that long-term investors are choosing safe storage (self-custody), thereby reinforcing their confidence in Bitcoin's future prospects.
However, when juxtaposed with data on the high number of sending addresses and capital flowing into altcoins, it is possible that part of the Bitcoin withdrawn from exchanges has been used to purchase altcoins, rather than just for cold storage. This development indicates that the market is experiencing a large-scale shift, with diverse asset allocation decisions by investors.
Analysts suggest that outflows from exchanges linked to altcoin purchases will indicate that the crypto market trend is entering a new cycle, but it cannot yet be said that long-term confidence in Bitcoin is declining as personal storage actions continue to rise steadily.
What do these movements mean for Bitcoin?
A compilation of on-chain indicators and investor behavior shows that the Bitcoin market is currently experiencing strong movements. Bitcoin is losing some of its trading appeal compared to altcoins, which have seen significant price increases in the last 48 hours.
The increase in Bitcoin moving off exchanges is a strong indicator that long-term investors still maintain their confidence in Bitcoin, despite short-term capital flow developments.
– Glassnode, Q2 2024 on-chain report
Despite the trend of reallocating capital to altcoins, outflow data from exchanges still demonstrates that many investors continue to regard Bitcoin as a core asset, slowly buying and holding long-term. The market is currently in a transitional phase, with long-term confidence not broken, despite short-term reallocating decisions to other potential channels.
The overall picture shows: Bitcoin is entering a phase of rebalancing its position amid competitive pressures from altcoins, but the intrinsic value and central role of Bitcoin remain upheld by the sustainable trust of long-term holders.
Frequently Asked Questions
What does the record low Bitcoin transaction fee signify?
The bottoming out of transaction fees reflects a sharp decline in network usage demand and trading activity, signaling a quiet phase in the market. (Source: Glassnode)
Why are investors withdrawing Bitcoin from exchanges?
They may store safely for the long term or rotate capital into altcoins, taking advantage of short-term profit opportunities. (Source: CryptoQuant)
Does the capital shift to altcoins have a long-term impact on Bitcoin?
This trend is mainly short-term to take advantage of price volatility, while long-term confidence in Bitcoin remains very large. (Source: Glassnode report)
How to recognize if investors are diversifying their portfolios?
The sharp increase in the number of sending addresses for Bitcoin indicates that they are restructuring their assets, shifting capital to other investment channels. (Source: AMBCrypto, CryptoQuant)
When might Bitcoin transaction fees rise again?
When the market is active and network usage demand increases, transaction fees will rise. (Source: Cryptocurrency industry analysis chain 2024)
Source: https://tintucbitcoin.com/nha-dau-tu-altcoin-anh-huong-phi-bitcoin/
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