Why Bitcoin Transaction Fee increases Over Bitcoin Price Increase?

[Charles-Tim]

In your second paragraph you said of decongestion of the mempool because of bear market. I have a question; either people are buying or selling bitcoin, there is transaction in both cases. That is to say, if people are rushing to sell off their Btc during a bear market, same congestion that is experienced during a bull market should also happen. Or am I missing anything?

What can accurately be related to bitcoin fee estimation is how congested the mempool is, because if not congested, the feerate (sat/vbyte) will be low while the feerate will be increasing as the mempool is becoming more congested. It is clear how bull market will make many other people fomo and buy bitcoin which will lead to mempool congestion, but if people that are buying reduced, there will be a time the mempool will not even also be congested again unlike the time when the price was continuing to increase. What I meant about the bear market is that some people will sell their bitcoin at the time, after they sell it, also people that will make bitcoin for transaction will later reduce as the fomo decreased significantly, this will decongest the mempool.

[1714943305]

1714943305

[1714943305]

1714943305

[1714943305]

1714943305

[Pmalek]

I understand that this is cruel capitalism where everyone takes advantage of the other to the extreme, but I still think it is very unfair to have such a large withdrawal fee for BTC. However, users may start using other crypto exchanges now that Binance has KYC for all users - which was not the case until recently.

I don't like it either, but all I can do is not use Binance. I doubt that will have a significant effect on their business profits though. Binance is just one of many exchanges that have either incorporated KYC/AML regulations or will do so in the future due to pressure from regulators (the same reason Binance is doing it). 

The transaction fee is a reward to miners as I was told.

It is when you send bitcoin to someone else from your private wallet. When you withdraw coins from a centralized exchange or a casino, only a small part of what you pay goes to the miners. The exchange pockets most of it. The fees Binance takes are around $22 equivalent in BTC for Bitcoin withdrawals. The high priority fee on Mempool.space right now is 2 Sat/vB ~ $0.12. Binance will pay more than that, but even if they paid $2, you can see how much they pocket themselves and how much is given to the miners.

[Nathrixxx]

Yes its possible the transaction fees increased, base on the law of economics on demand and supply, but i think a preferably solution has been made to such exoberant transactions fees which brings about the innovations of lightening network, one of the key features is that it make transactions off block chain with the lowest fee and can be faster, easier, and multiple participants can benefited on a single time transaction. Its a multi-sig account created using smart contract.

You can explore for more readings on the lighting network via Basics of Lightning Network