Bitcoin Forum

Does anyone know why this is the case?  Surely it would drop right since the fees are outrageous and would move other people to buy other coins?

Cause when you are hodling you don't care about transaction fees.

Exactly.

OK let's assume you are right. --Because everybody is holding-- would be the answer to the OP's question. But, let me ask this: why are the fees so high and transaction backlog 130k+ if everybody is holding (so nobody is transacting, I assume)?

Actually the OP is right, what we are seeing right now makes little sense and begs for explanation

EDIT: maybe the correct answer is that everybody is holding and if not - the demand is on the buying side.

Most investors won't care about this right now as they are holding their Bitcoins and keep holding their Bitcoins for long. But these fees are really too high.

It is 2 different things here. High transaction fees doesn’t mean no demand. It simply means the buyers are willing to pay such high price for Bitcoin. Or it can only be explained that Bitcoin buyers don’t mind about the fees.

I imagine most of these are people sending coins to their own addresses, or back and forth from exchanges. After all, what you have stated is entirely logical. It's a given that if a currency is being used for its utility in transactions and it fails to do exactly that, people are going to look elsewhere.

But yeah, the correct answer is that while Bitcoin can still be used as a currency, its primary utility is as a storage of value and as an investment. Heck, even cryptos that actually have fast and cheap transactions are primarily being used as a storage of value. Such is crypto's reality these days.

The prices are high because the demand is high and supply is low. If you ask why is it not correcting itself because new people are investing every day, they fear on missing out the bitcoin train. The transaction fees are high because every transaction needs to mine by a miner, the miner will only mine if he gets profits on the investment he made to mine a block.

Because people who complain about fees are trying to move 10$ or 50$.
Those that move millions and can influence the market don't give a damn about a 15$ fee.
And as Vod said,for the others, it costs 0 to HODL.

So the cost of transactions, even combined with all he FUD about them is not affecting the price the in the slightest way .

Seems like the market is telling us that Bitcoin investors don't care about rising fees. If cheap fees were important to the market, it would have a discernible effect on supply and demand.

If most people are simply holding BTC as an investment, they're not even paying fees to use Bitcoin, so it doesn't matter to them. At the same time, transaction volume is generally increasing, meaning that people still find value in on-chain transactions at these fee rates. At some point, equilibrium will be found, and transaction volume will drop due to growing fees. That will naturally cause network fee rates to drop.

Because a lot of people hold bitcoin purely to speculate on the price instead of to actual use it to conduct transactions. Also many who conduct transactions are using large amounts of bitcoin and so a fee of $10 or so isn't actually all that much. But you're right that large fees will be holding bitcoin back.

Sending fee is not everything for bitcoin. There is more of it, the mining difficulty, the demand, the popularity, manipulators, adoption etc.

It's not only a payment method. It has many aspects behind.

The reason is that this is digital money (crypto money) which has its own rules. And also Exchangers and Wallets have their own policies, in determining the delivery fee.

Of course, if you are holding more than one bitcoin, and you bought that bitcoin at $200 (let's assume)

Would you sell those bitcoins when the price has already made x100 and you have to pay $20 or $30 for fees?


I have seen that a lot of people were desperated for withdrawing their money.

There was a guy who withdrew more thn $50,000 and he paid fees worth of $3,000 to make his transaction go through, that is a bunch of money and i would never spend that amount just for "fees".

Its because people were not in bitcoins for the reason transaction fee is low.So,they are not going to leave bitcoin or that single reason.Mostly,bitcoin is nowadays considered as a valuable digital asset and since its price is increasing heavily,most people don't find it as a serious issue for transaction fee getting high.They just want to continue using bitcoins.

On the contrary, the fact that transactions are so high are forcing people to use bitcoin exclusively as a store of value, so it would not be logical for people to spend their "gold" to buy hamburgers or cigarettes.

there are two things happening:

1) the market doesn't care about fees. if there are people selling because fees are too high (perhaps to buy other cryptocurrencies), then that supply is being absorbed by speculators who expect a higher bitcoin price. price is all about supply and demand. if speculative investors are in control of the market, it doesn't matter that small BTC payments are becoming uneconomical.

2) there is also another consideration: high fees prevent people from spending, encouraging holding. this lowers supply, increasing the price.

There is a lot of speculation going on at the moment.  A lot of people are in Bitcoin because they believe in the technology, a lot of people are also getting in because the price is going up.  Because people think Bitcoin has a long way to go people don't want to use it to buy coffee and a newspaper in the morning, that's what fiat is for.  The core team seem like they are making decent progress with LN so when Bitcoin price discovery is pretty much over, transaction costs shouldn't be an issue.

I think transaction fee is not main factor on increasing price. It depends on supply and demand. If demand is higher than supply, then price gets high. Holding is important in this stage.

Bitcoin's price isn't dropping because everyone is just holding bitcoin. And as the price of bitcoin is increasing because of it's demand is high too. There are too many transactions that are coming in bitcoin and that results to congestion and most of us that are holding bitcoin we don't want to spend $30 fee for a $15 worth of bitcoins that needed to be sent. Some are converting bitcoins into altcoins to avoid crazy fees.

Price is not driven by people who hold BTC but by ones who are active on exchanges. Traders keep their assets on them and they do not care much about transaction fees. If they need to transfer value through different exchanges they just do it by quicker cryptos.

You are correct, and there's a good reason why investors don't value cheap fees much and don't move to other coins that have higher capacity - investors mostly care about Bitcoin's security and decentralization features, and they know that Bitcoin is decentralized because of its big network of nodes, and that raising blocksize would result in centralization issues. Bitcoin is really digital gold, and moving gold is quite expensive, so people who are looking for decentralized currencies should use some altcoins since they don't need Bitcoin's mega security for their $100 transactions.

My stand on this is that people nowadays are not looking at bitcoin as payment system, but more of an asset where the value is keep raising as the time goes by. If most of the holders are thinking this way we can safely say that price of bitcoin will definitely soar due to holding.

The situation only explain the law of supply and demand the higher the demand is the more it is likely to increase its price. Investors who are investing millions of dollars or thousand of dollars never mind the fees if they are getting more than what they pay for it.

Due to the high demand for bitcoin transactions, commercial sites have increased their fees to make more profit. Also, due to the difficulty of exploiting bitcoin, it is also possible that the transaction fee paid to the miners will increase. These have led to increased bitcoin transaction fees due to high demand.

Agreed. I think that more people is on the buying side and holding later that's why the bitcoin price is not dropping even if the sending fees are so high. It seems that bitcoin has been transitioning from a mode of transaction into an investment thing, that's why few people are concerned that transaction fees are high.

I think it's worth the bitcoin price today, so I suggest you have a lot of bitcoin, so that your results will be felt. if you have a bit bitcoin, it's better to hold it first.

That's not the right analogy, just the opposite. When unconfirmed transaction in network reach up 100k more, this can be happen caused some likes issue about a new hard fork 'smart contract' which they will make Bitcoin great again, it will be launched on last December 12.
So, many traders exchange their altcoins to bitcoins. As usual high fees appear when the network reaches 75k unconfirmed transaction.

People are holding bitcoins because of the rising price and all!
So for them fees is not a major concern

Sending fees are not the main reason for bitcoin price grow up. When demand is higher than production then bitcoin price grow up. In this time you can hold bitcoin.

This is very good question. If anybody know the real answer please tell us here.
I dont really know why? But small anwer maybe worth, the fee of sending bitcoin does not change the trust of people to bitcoin itself. So the fee mean nothing to bitcoiners.

If people were unwilling to pay the transaction fees the transaction backlog and transaction fees would dry up extremely quickly. The fees operate on supply and demand, the more transactions there are normally means people get antsy about moving their coins and start congesting the network with high fee transactions so that they will go through first. I would be willing to say that there is no (or next to none) correlation between transaction fees and a decrease in bitcoin price. It's not as though these transaction fees are arbitrarily imposed upon each transaction; it very much operates on supply and demand, and right now there is a high demand for bitcoin transaction, which means higher fees, not lower price. In my opinion you're trying to connect two dots on different pages, they just don't go together. At best, high-volume of transactions and high transactions fees would correlate with price drops about 50% of the time; because if you simplify price jumps and falls pretty rigidly it could be either dumps or pumps.

- it is because transaction fees aren't that high. even if you are paying $12 per transaction, many still wouldn't mind. simply because even if you have invested $100 in bitcoin a couple of days ago when it was $15,000 now you have more than $126 and even if you pay $12 fee you still make $14 profit.

obviously nobody invests $100. with bigger investment the fee becomes negligible.

additionally it has not been that long since fees were this high. people may be unsatisfied about it, but it takes a lot longer and lot higher fees to make them change their minds about investing in bitcoin.

Owing to the high fees many users would just opt to hold on to their bitcoins. Others want to acquire btc as well which is why transaction fees skyrocket.