It's noticeable that in every bull market there seems to be a lot of new entrants. A frenzy takes place and people get extremely excited when they start seeing large increases in price. But what do fees have to do with the bull market and how are they related to the Bitcoin price?

  • Total Transaction Size continues to grow
  • People are willing to pay higher fee prices in a bull market
  • Fees are priced in USD not in BTC

Over the past 12 years the amount of transactions going through the Bitcoin network have been increasing. More people are making transactions on a global monetary network with some mechanisms to keep the transaction fees low. Recently bitcoin has seen an efficiency increase with SegWit improving the way people make transactions but this isn't the only reason transaction fees are low.

As it stands now the Total Bitcoin Transaction Size is recovering from its drop in Q2, but generally continuing its uptrend. There are a few other things that can be gleaned from this chart as well. Looking back at each bull trend there was a huge drive in the average fee (BTC). It's safe to assume that during large increases in price, people are willing to pay a higher price for their fees, generally because there is much more demand.

An interesting thing to point out on this chart is that in the last two cycles, there was a cap on the dollar amount to what people are willing to pay. This was based in USD not BTC and at around $45 per average transaction. If you follow the BTC average fee, it is much lower than last cycle. So if people are the ones willing to pay higher fees each bull market, it isn't unreasonable to assume that they also have a USD fee limit in mind. What this says is that people are pricing their fees in dollars not satoshis. It seems that people are starting to put a price on how much it is worth to send an on-chain translation, much like how much an apple, or product might be worth.

There may be other factors at play here, but at least there is a sense of what the average person is willing to pay in fees. It should be interesting continuing to watch this trend in the coming years as the Bitcoin price changes and more data is provided.