Bitcoin’s total transaction fees recently surpassed Ethereum’s, reaching a historical high, driven by the Rune protocol launched alongside the Bitcoin halving. However, the Rune-related transaction frenzy has declined recently, with a decrease of 98.4% compared to the day of the halving.
According to data from The Block, the average transaction fees on the Bitcoin network have surged as a result of the Rune protocol’s popularity during the Bitcoin halving. The 7-day moving average of Bitcoin’s average transaction fees has exceeded $40, which is about 10 times higher than Ethereum’s $4.10.
At the same time, Bitcoin’s total transaction fees have also surpassed Ethereum, with a 7-day moving average of $25.77 million, reaching a historical high.
It is worth noting that the market cap/transaction fees ratio of Bitcoin and Ethereum has recently reversed. This ratio is calculated by dividing the blockchain native asset market cap by the annual total fees paid to the network. This is somewhat similar to the price-to-earnings ratio (P/E ratio) used to observe traditional companies. Earlier this month, the moving average of Bitcoin’s market cap/transaction fees ratio was 2400, while Ethereum’s was only 118.33. However, on April 25, Bitcoin’s ratio dropped to 220.77, lower than Ethereum’s 227.12. This is the first time since July 2019 that Bitcoin’s 7-day moving average of market cap/transaction fees ratio has fallen below that of Ethereum.
The Block points out that a higher market cap/transaction fees ratio may indicate that the asset is overvalued, while a lower ratio may indicate the opposite. Although recent changes do not necessarily mean that Bitcoin is undervalued or Ethereum is overvalued, they do reflect the significant demand brought by the Rune protocol and its impact on the Bitcoin network.
However, the phenomenon of Bitcoin’s market cap/transaction fees ratio being lower than Ethereum’s is relatively short-lived, as the recent decline in the Rune frenzy has caused a slowdown in Bitcoin transaction fees.
According to data from Glassnode, after the halving, Rune-related transactions on the Bitcoin network generated a total of $117 million in transaction fee revenue, with Rune-related transactions on the day of the halving alone generating $62.4 million. However, as the Rune frenzy subsided, on April 28, Rune-related transactions contributed only $1.03 million in transaction fees to the Bitcoin network, representing a decline of 98.4% compared to the day of the halving.
According to mempool data, Bitcoin network fees have significantly declined to the range of 19 sat (1.53 USD) to 24 sat (1.93 USD) per byte, compared to the Bitcoin halving day when it briefly soared to 1428 sat (127.59 USD) to 2232 sat (almost 200 USD) per byte.
Paradigma Education’s cryptocurrency analyst Guiriba recently pointed out that out of the 20,000+ Rune tokens currently available in the market, only 77 can be considered successful, accounting for less than 0.4%. This lack of profitability may be a major factor contributing to the decline in the Rune frenzy.
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