Bitcoin’s Rising Transaction Fees Signal Increased Demand for Blockspace

On Sunday, Bitcoin’s price reached nearly $106,000, surpassing a recent high of $105,600 seen on May 12. Although BTC dipped slightly after, it currently trades at around $104,500.

Fees Hit New 2025 Highs

As Bitcoin’s price climbs, so do its transaction fees. The seven-day moving average transaction fee has risen by $1 since the start of May, now standing at $2.40. This is the highest fee recorded so far in 2025, as reported by The Block.

Bitcoin’s Dominance Sees an Uptick

Alongside the increase in fees, Bitcoin’s dominance has also seen a slight rise, recovering from a dip two weeks ago. This could indicate that the recent price pullback in Bitcoin compared to other cryptocurrencies was likely driven by liquidity issues rather than a shift towards an “altcoin season.”

Transaction Volume Drops Despite Higher Fees

Interestingly, the rise in transaction fees seems to be balanced by a decrease in the average number of daily transactions. On April 22, BTC processed 507,000 transactions, but that number has since fallen by 35%, dropping to 330,000, according to The Block’s data.

Illiquid Supply Hits New Record

Bitcoin’s illiquid supply, which refers to BTC held in wallets with minimal spending activity, has recently reached an all-time high, according to Glassnode data. The decrease in the supply of Bitcoin available on exchanges suggests that a surge in demand could lead to a supply shock, potentially pushing prices even higher.

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