The halving has caused transaction costs on both the Bitcoin and Ethereum networks to rise significantly, with Bitcoin recording 800% growth in the past 3 months. However, the median transaction costs on other major networks, such as Bitcoin Cash, Bitcoin SV, XRP and Litecoin, have remained relatively flat over the same period.
BTC and ETH transaction costs continue to rise
The block reward halving is one of the most monumental events in the Bitcoin ecosystem, with its consequences months before and after it happens. And while the effects on Bitcoin have been discussed intensively this month, an over-focus on Bitcoin doesn’t provide a bigger picture – that the halving has also affected Ethereum.
According to CoinMetrics latest report, transaction fees on both the Bitcoin and Ethereum network have skyrocketed after the halving. This came as a surprise, as most of the other statistics on the network, illustrated in the chart below, have remained relatively flat.
Table with the 7-day average statistics for the top 5 cryptocurrencies. (Source: CoinMetrics)
Bitcoin and Ethereum see median rate increases of 800% and 250%
On May 14, two days after halving, the median transaction costs on the Bitcoin network reached $ 2.88, the highest since June 2019, CoinMetrics discovered. Data from Bitinfocharts shown that the average Same-day transaction fees increased to $ 5.1.
Ethereum also recorded the highest median translation costs since August 2018 on May 14, reaching $ 0.25. According to Bitinfocharts, the average transaction fees that day rose 30% in 24 hours, reaching $ 0.55 at one point.
This was most likely due to the fact that both networks had relatively full blocks, the report reports, adding that other high-market cap cryptocurrencies such as Bitcoin Cash (BCH), Bitcoin SV (BSV), XRP and Litecoin (LTC) do not have registered any meaningful increase in transaction costs.
With block rewards reduced to half, the transaction fee was expected to rise as miners would suddenly start earning half of block rewards earnings. Currently, their income from fees is a very small percentage of that from block rewards. The increase in Ethereum’s fees can also be attributed to the increase in stablecoins activity, many of which are ERC20 tokens.