Low Bitcoin and Ethereum fees may not necessarily be good news.

Bitcoin and Ethereum users who need to move their money can take advantage of low fees in both ecosystems.

The average Bitcoin (BTC) transaction fee hit an eight-month low of $1.93 on June 23. Average Ethereum fees were $0.70 on June 22, compared to a high of $2.50 as recently as March.

Vitaly Dervod, CEO and founder of onchain decentralized exchange Spark, told Cointelegraph:

“Bitcoin's transaction fee reduction is largely related to reduced network congestion and adjustments to mining operations following the recent stripping event.”

Dervod, who has a decade of experience working in a variety of financial institutions including banks, fintech ventures and DeFi, told us that this drop is not particularly surprising.

“[The] Halving often results in a temporary decrease in mining activity as miners adjust to low profitability. This reduction in activity will reduce competition for space and lower fees,” he said.

According to Justin D'Anetan, head of business development APAC at crypto market maker Keyrock, additional factors contributed to the price drop.

“The last few months have seen high transaction speeds in systems and runes texts, but the hype is not dead, but it seems to have subsided,” d'Anetan told Cointelegraph.

Speaking to Cointelegraph, Carlos Mercado, a data scientist at blockchain data firm Flipside Crypto, pointed to Ordinals as one contributor.

“After the halving, there were some short-term spikes in onchain BTC activity and payments. But in general, ordinals and narratives of BTC texts come and go.

It could be bad news for Bitcoin miners.

While price cuts may be good news for consumers, the picture is less bleak for miners.

Mercado “BTC Payments [were] Compensating for lost block rewards” at least until recently.

He added: “In order for Bitcoin to be secure in the long term, miners running proof-of-work must be able to recoup their electricity/computing costs in the real world.” Cutting their income in half in half a day, the only way to make up for the loss is higher prices or more income. [transaction] Payments”

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D'Annethan made similar points in his own analysis. Seeing if fees go up or down doesn't have a direct impact on Keyrock, but even so, others can feel the pinch.

“From our perspective, this is it. [low fees] It is neither positive nor negative,” he said. “Bitcoin will remain the same […] Miners should still feel the pain, however, as their halving losses have been softened for some time by high transaction volumes.

According to d'Anethan, the results were already being felt.

“We're actually seeing some miners selling BTC, probably to offset the need to make lower profits and cover costs,” he said.

Regarding Ethereum payments

While Bitcoin's low transaction fees are linked to the halving event and normal demand decline, Ethereum's low fees are linked to the Dencun update in March.

“Ethereum is always a crooked but clear variable. If more people want to use the network, it will become more expensive and less people will want to use it, which in turn will make it cheaper,” d'Anetan added. .

D'Anethan said that most of the traffic on Ethereum's shoulders has now moved to Arbitrum, Optimism and Base, as Ethereum thought.

“Denkun's update aims to solve that by making Layer-2 activity much cheaper […] This has pushed both builders and users,” said D'Annetan.

This is ultimately positive as it makes onchain activity cheaper and more accessible. Although of course the massive chain on Ethereum also presents challenges, risks and costs.

Dervod agrees that the shift to layer-2 solutions is driving down fees.

“Ethereum's fee decline is mainly due to the adoption of L2 solutions such as Optimist and Zero Knowledge hashes. As more complex operations and initial transactions move to these L2 platforms, the Ethereum main chain is becoming more streamlined for basic transactions, resulting in lower fees,” Dervod said.

Are lower transaction fees good news?

Whether low fees are good or bad is a matter of opinion.

“Lower fees can be seen as a beacon for the ecosystem. The transition to efficient L2 solutions represents a significant improvement in Ethereum's roadmap to scalability and advanced technology. This positions it as a more adaptable framework for future applications,” Dervod said.

There are different interpretations of the sustainability of this low-paying environment.

Dervod added, “The ecosystem may see constant fluctuations due to changes in mining economics and network activity.” However, for Ethereum, as the adoption and development of layer-2 solutions grows, the lower fees may continue to increase the capacity and efficiency of the network without sacrificing security.

“Without clear incentives for either ecosystem, Bitcoin or Ethereum, it's hard to imagine the transaction count and subsequent fees increasing in any significant way,” D'Anettan said, adding, “Crypto will continue to be very volatile and fast-moving.” A sector where new memories, new products, new incentives can be done in a flash.

Opposite view

While Dervod and d'Anethan were mostly bullish on low fees, Mercado took a more subtle interpretation.

“The same trend (L1 payments are decreasing) on ​​both Bitcoin and Ethereum have a similar depression interpretation,” said Mercado.

“BTC is giving away $27 million worth of BTC per day to miners, of which only about 5% is directly related. [transaction] Payment” he told us.

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Taking a more long-term view, he added, “Half the concern here is that it will continue to happen until the end.” [transaction] Fees or prices must increase, otherwise miners will be forced to reduce their proof of work when the cost of electricity based on fiat exceeds their income.

On Ethereum, Mercado said, “Ethereum is spending $8 million a day in rewards, about 20% of which is related to EIP-1559 burns and burns. The burn is occasionally greater than given, but not recently, with a lot of activity crammed into the L2s.

For Mercado, this means that the product may go through periodic burnouts, resulting in “long-term inflation of ETH,” which, in turn, “could lead to less security if consensus becomes more centralized over time.” Consensus method.