Markets
Bitcoin fee changes in transaction trends and market dynamics
Onchain Highlights
DEFINITION: The Exchange Fee Dominance metric is defined as the percentage amount of total fees paid in transactions related to on-chain exchange activity.
- Deposits: Transactions that include an exchange address as the recipient of the funds.
- Withdrawals: Transactions that include an exchange address as the sender of the funds.
- In-House: Transactions that include addresses from a single exchange as both the sender and recipient of the funds.
- Inter-Exchange: Transactions that include (distinct) exchange addresses as both the sender and recipient of funds.
Bitcoin exchange fee dominance, represented as a 7-day moving average, has shown significant fluctuations since early 2024. In particular, the dominance of fees associated with deposits, withdrawals, internal transfers, and interexchange transactions has experienced periods of strong rise and decline.
Dominance of exchange fees: (Source: Glassnode)
There was a sharp increase in foreign exchange-related fees in early 2024, which peaked around the beginning of February. This spike was mainly driven by intensified activity in deposits and domestic transactions. Over the course of the year, the dominance of foreign exchange fees showed a cyclical pattern with notable peaks in mid-May and mid-June, coinciding with increased market activity and potential strategic repositioning by investors.
By comparison, long-term data from 2017 reveals a broader trend of exchange fee dominance, closely aligned with major market movements. Significant spikes in trade-related fees have corresponded to critical price milestones, such as the bull runs of late 2017 and early 2021. These periods have been marked by substantial market volatility, reflecting increased trading volume and increased trading activity. exchange on the chain.
Recent data suggests that Bitcoin’s post-halving price and exchange fee dominance are mostly correlated, reflecting broader market conditions and investor behavior. This continuous interaction highlights the importance of exchange-related activities in the Bitcoin ecosystem, influencing transaction costs and overall market liquidity.