Starting last year until now, transaction fees have improved compared to the previous bullish period. Right now, fees are still cheap compared to the past, where sometimes they even reached $100 or more during a bull run. So, what changed? Will these low fees continue in the long term, or might we see another spike in fees when the price of Bitcoin surges again?
Majority of everyday monetary Bitcoin transactions has moved to the Lightning Network, where payments are instant and fees are extremely low. On-chain transactions are mainly used for larger transfers, sending BTC to cold storage, or opening and closing Lightning channels. There are also many non-monetary transactions and spam on-chain. As the exchange rate rises against fiat currencies, it attracts more people who want to own Bitcoin, make on-chain transactions, save in Bitcoin, and send BTC to their cold wallets. Every new bull run brings a wave of newcomers, so it’s likely that on-chain transactions will surge again in the bull run expected by the end of the year.