Asia Morning Briefing: Bitcoin's ETFs Eliminate Transaction Fees, Straining Miners Further
As capital flows into ETFs and custodial solutions, retail interest shifts to Solana, resulting in stagnant on-chain demand for Bitcoin and raising questions about miner sustainability amidst minimal transaction fees.
What You Need to Know:
- Bitcoin remains high in price, yet transaction fees are significantly lower, reflecting a change in market behavior.
- Retail activity has transitioned to Solana, which impacts Bitcoin’s on-chain demand and fee dynamics.
- Miners are diversifying into AI and HPC hosting due to diminishing traditional mining profitability.
Good Morning, Asia. Here’s today’s market news:
Welcome to the Asia Morning Briefing, your daily update on key stories during U.S. hours along with market analyses. For an in-depth market review, check CoinDesk’s Crypto Daybook Americas.
Bitcoin’s price hovers near all-time highs, but on-chain activity is subdued. Data from Glassnode shows that transaction fees have dropped toward decade lows while BTC price nears six figures.
Historically, fee increases accompanied bullish markets as traders vied for block space. However, this year, fees have flattened even as prices increase, indicating that on-chain demand no longer drives the market dynamics.
A new Galaxy Research report reveals that average daily fees have fallen over 80% since April 2024, with about 15% of daily transactions occurring at the lowest fee rate. Nearly half of recent blocks are not fully utilized, signaling a lack of demand and an idle mempool.
This contrasts sharply with previous bullish periods when price rises would lead to congestion and increased fees.
The data highlights a fundamental shift where ETF and custodial services now possess over 1.3 million BTC, with these holdings rarely interacting with the blockchain.
Simultaneously, retail activity that once congested the Bitcoin network has moved to Solana, benefiting from faster and cheaper transactions for memecoins and NFTs. As a result, Bitcoin’s price is increasingly influenced by custodial inflows, while its on-chain activity—previously indicative of price movements—has considerably declined.
Miners are facing significant challenges. With rewards halved to 3.125 BTC and fees contributing less than 1% of July’s block revenue, profitability is under strain, pushing miners towards AI and HPC hosting.
For More: Read the article on CoinDesk for further insights.
Market Overview
- BTC: Bitcoin traded at $113,286.95, down 1.79%, briefly dropping to a six-week trough near $110,600 amidst significant market volatility.
- ETH: Ether remained steady at $4,779, buoyed by Jerome Powell’s dovish remarks during the Jackson Hole meeting, fostering expectations for a rate cut next month and instigating predictions for new highs.
- Gold: Gold settled at $3,371, following Powell’s comments on likely rate cuts.
- Nikkei 225: Asia-Pacific stocks rose, with Japan’s Nikkei 225 increasing by 1.08%, following Powell’s September cut hints during his speech.
