On-chain data shows that the recent trend in the bitcoin transaction fee indicator may suggest that the crypto is now entering bear market phases of late.
The bitcoin “fee to block reward” metric has risen recently.
As an analyst in the Cryptoquant post pointed out, the BTC fee metric could show that a bear market may now move into a late stage.
The relevant indicator here is the “fee for block reward”, which measures what percentage of the total block reward is made up of bitcoin transaction fees.
When the value of this metric increases, it means that the fee is now making up a higher amount of the total miner reward.
This may suggest that there is increasing activity in the network. Such a trend usually occurs during periods of bull markets.
On the other hand, a downtrend for this indicator could mean that the blockchain is just becoming more passive. Low values of the metric usually appear during bear markets.
Now, here is a chart that shows the trend of bitcoin fees blocking reward (30-day MA) over the years:
Looks like the value of the indicator has been going up recently | Source: CryptoQuant
In the above graph, volume marks important areas of the bitcoin fee trend to block reward metrics.
It seems that the value of the fee indicator has historically been very high before and during the bull market.
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In contrast, the metric has always assumed significantly lower values during periods of bear markets. Both these trends are as expected.
Over the past few months, the metric has been flat on a lower value as fees remained low due to a lack of activity on the chain.
However, more recently the transaction fee has increased in value, leading to an increase in the fee for blocking the reward indicator.
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Such spikes have also appeared during bear markets in the past, and they have generally signaled the start of a late bear market.
If these past examples are anything to go by, the current spike in the metric could also suggest that bitcoin is now entering a bear period of late.
At the time of writing, bitcoin price is swimming around $31.6k, up 3% over the past seven days. The chart below shows the trend in the price of crypto over the past five days.
The price of the coin seems to have surged up over the past day | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com