Over 50% Off Bitcoin Exchange Rates This Year

According to YCharts data, the average Bitcoin network exchange rate this year fell 57.97% from US $ 4.4 to US $ 1.8. This reduction can be caused by a number of factors.

One explanation is the rapid expansion of the Bitcoin Lightning network, where this type of exchange occurs off-chain, where it can act as a catalyst.

The Bitcoin network charges a fee for each exchange. Then the money was distributed to the miners. When the network is congested and market demand far exceeds the miner's capacity, most users have to pay more.

On April 21, the average Bitcoin network exchange rate hit a record high of $ 62.8 per exchange. This is because when the demand for Bitcoin is high, Chinese miners stop working and delay block production.

The depreciation can be due to the safety of Bitcoin miners without losing interest in the market. This reduces the difficulty of mining, which measures the difficulty in recognizing the Bitcoin market.

Another reason for the reduction in exchange rates is the possibility of congestion in mempool, which is the consolidation of all industries on hold. Once an exchange is sent to the Bitcoin network, it stays in mempool until it is confirmed. Since each BTC block is 1MB in size, the larger mepool may appeal to miners with bigger results.

In these situations, consumers start paying more to ensure that the exchange is not registered in mempool. This increases the total exchange rate of the Bitcoin network.

As the figure below shows, the size of the Bitcoin mempool is less than its maximum capacity.

The average number of businesses has also declined in recent months. At the start of 2021, there were on average over 350,000 transactions per day, but now that number has dropped to between 250,000 and 213,000 per day.

Another possible explanation for the price drop is that Bitcoin traders and holders prefer to use less BTC. As demand decreases, the value of each token decreases, reducing the exchange rate.

At the same time, Ethereum prices have also fallen alongside the decline of other cryptocurrencies. At the time of the announcement, the average price on the Ethereum network was US $ 4.9, compared to US $ 69.92 on May 12, 2021.

At the start of the new week, BTC fell back to $ 57,000, temporarily ending the week with volatility caused by falling prices.