Low transaction fees on Bitcoin and Ethereum have recently made headlines, offering apparent relief to users transferring funds across these networks. On June 23, Bitcoin’s average fee dropped to $1.93—the lowest in eight months. Around the same time, Ethereum’s average transaction cost fell to just $0.70, a significant decline from its $2.50 peak in March. While lower fees might seem like a win for everyday users, experts suggest the underlying reasons could signal deeper structural or economic concerns for the long-term health of both blockchains.
The Causes Behind Declining Fees
Bitcoin: Post-Halving Adjustments and Fading Hype
Vitali Dervoed, CEO and co-founder of Spark, a decentralized exchange, explains that Bitcoin’s falling fees are largely tied to reduced network congestion and mining adjustments following the 2024 halving event.
“With miners adapting to lower profitability, halvings typically lead to a temporary reduction in mining activity. Less activity means less competition for block space, which naturally lowers fees,” Dervoed said.
Dervoed, who brings over a decade of experience from traditional finance and DeFi sectors, notes this trend isn’t surprising. The halving cut block rewards in half overnight, forcing miners to rely more heavily on transaction fees to maintain profitability—a balance that has yet to stabilize.
Another contributing factor is the cooling interest in Ordinals and BRC-20 inscriptions. After a surge in activity earlier in the year, demand has slowed significantly.
Justin d’Anethan, Head of Business Development APAC at crypto market maker Keyrock, observes:
“We saw a massive spike in transaction volume after Ordinals and runes launched, but the hype has clearly cooled—even if it hasn’t completely died down.”
Carlos Mercado, a data scientist at Flipside Crypto, echoes this view:
“There was a short-term spike in BTC on-chain activity post-halving. But overall, the Ordinals narrative comes and goes—it’s cyclical.”
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Implications for Bitcoin Miners: A Growing Challenge
While users benefit from cheaper transactions, Bitcoin miners face increasing financial pressure. With block rewards halved, they now depend more than ever on transaction fees to cover real-world costs like electricity and hardware maintenance.
Mercado emphasizes:
“Bitcoin fees are meant to compensate for lost block rewards. In the long run, miners must be able to recover their operational costs. After the halving, their income dropped by 50% overnight. To make up for it, either the price of BTC must rise—or transaction fees need to increase.”
Currently, Bitcoin issues around $27 million worth of new BTC to miners daily, but only about 5% of that comes from transaction fees. This imbalance raises concerns about network security.
“The worrying part is that halvings will keep happening,” Mercado warns. “Eventually, fees or prices must rise—or miners will scale back proof-of-work operations when their electricity costs exceed revenue.”
There’s already evidence of stress in the mining sector. d’Anethan notes:
“We’ve seen some miners selling off Bitcoin—likely to cover declining revenues and operational expenses.”
This behavior could lead to increased selling pressure in the market and further destabilize miner economics.
Ethereum’s Fee Drop: Success or Side Effect?
Unlike Bitcoin, Ethereum’s declining fees are less about reduced demand and more about successful scaling solutions—specifically the Dencun upgrade in March 2024.
d’Anethan explains:
“Ethereum has long struggled with a paradox: more users make the network more expensive, which then drives users away—making it cheaper again.”
The Dencun upgrade introduced proto-danksharding and blob transactions, drastically reducing costs for Layer 2 (L2) rollups like Arbitrum, Optimism, and Base. As a result, much of Ethereum’s high-volume activity has migrated off the mainnet.
“Dencun was designed to make L2 activity cheaper,” d’Anethan said. “And it worked—so well that it may have pushed too much traffic off-chain.”
Dervoed agrees:
“Ethereum’s fee decline is primarily due to growing adoption of L2 solutions like optimistic and zero-knowledge rollups. As complex trades and derivatives move to these platforms, Ethereum’s main chain becomes leaner—used mostly for settlements and simple transfers—thus lowering fees.”
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Are Low Fees Bullish or Bearish?
The answer depends on your perspective.
From a user and developer standpoint, lower fees indicate improved scalability and accessibility—a bullish sign for long-term adoption.
Dervoed argues:
“Lower fees reflect strong progress in Ethereum’s scalability and tech roadmap. The shift to efficient L2s makes Ethereum a more adaptable framework for future applications.”
He believes this trend could be sustainable:
“As L2 adoption grows, low fees on Ethereum may persist—boosting capacity and efficiency without sacrificing security.”
But not everyone sees it positively.
Carlos Mercado offers a bearish interpretation:
“The same trend—declining L1 fees on both Bitcoin and Ethereum—can also be seen as bearish.”
For Ethereum, he highlights a critical issue:
“The network issues $8 million daily in staking rewards. Only about 20% is offset by EIP-1559 and blob fee burns. Recently, burns haven’t exceeded issuance because so much activity is compressed onto L2s.”
This imbalance risks creating long-term ETH inflation, especially if consensus participation becomes more centralized over time—potentially weakening network security under proof-of-stake.
Frequently Asked Questions (FAQ)
Q: Why are Bitcoin transaction fees so low right now?
A: Fees dropped due to reduced network congestion after the 2024 halving and decreased interest in Ordinals and BRC-20 inscriptions.
Q: Does low Ethereum fee mean less demand?
A: Not necessarily. Most demand has shifted to Layer 2 networks, which use Ethereum for settlement but process transactions off-chain—reducing mainnet load and fees.
Q: Are low fees good for blockchain users?
A: Yes—lower fees improve accessibility and reduce costs for sending transactions or interacting with dApps.
Q: Could low fees threaten blockchain security?
A: Potentially. For Bitcoin, low fees mean miners earn less, risking reduced hash rate if unprofitable. For Ethereum, insufficient fee burns could lead to net inflation of ETH supply.
Q: Will transaction fees stay low forever?
A: Unlikely. Fees are cyclical. New narratives, applications, or surges in on-chain activity could drive them up again quickly.
Q: What role do Layer 2 solutions play in fee reduction?
A: L2s handle most transactions off the main chain, only submitting batched data to Ethereum—dramatically reducing gas costs and congestion.
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Final Thoughts
Low transaction fees on Bitcoin and Ethereum offer short-term benefits for users but reveal deeper economic dynamics beneath the surface. For Bitcoin, falling fees highlight post-halving miner struggles and fading speculative activity. For Ethereum, they reflect successful scaling—but raise concerns about long-term fee capture and tokenomics.
Ultimately, sustainable fee markets are crucial for network security and decentralization. While current lows may feel like progress, they also serve as a warning: without rising usage or structural changes, both ecosystems could face challenges in maintaining incentives for validators and miners alike.
Core Keywords: Bitcoin transaction fees, Ethereum gas fees, blockchain scalability, Layer 2 solutions, proof-of-work mining, EIP-1559 burn, crypto network security