The event the crypto market had been waiting for finally happened as Bitcoin surged past the $20,000 mark and managed to establish a new all-time high that was in excess of $23,000. While this is undoubtedly a big milestone for the world’s first cryptocurrency and one that everyone has been waiting for with bated breath, it did come with some unexpected consequences. After the new ATH, there were some massive increases in transaction volumes, which in turn, resulted in a substantial increase in transaction fees. This is something that had also happened to Ethereum, once the world of decentralized finance (DeFi) had kicked off. 

Therefore, the space had had to contend with some monumental amount of transaction fees. Now, the same seems to be happening with Bitcoin, as its transaction fees appears to be surging in tandem with its price. In a matter of five days, the average fee went from $2.71 on December 13th to a value of $11.9. With this hefty rise in cost, Bitcoin’s fees have become perilously close to the price tag of $13.5 that had last been seen in October 2020. Likewise, the great bull-run of 2017 had also experienced a massive surge in Bitcoin’s transaction cost. The average transaction fee back then had been around $55, which had made it downright impossible to use Bitcoin as a form of digital money.

This was the perfect time for forks to happen and so, Bitcoin Cash had been introduced, which promised lower fees and greater speed. However, for now, there are two major reasons why the price seems to be increasing so much. First and foremost, Bitcoin has seen a huge increase in its usage and trading. But, the fact is that the network itself has a lot of limitations, which means that only a minuscule amount of information can be held by every block. 

Due to the huge transaction volumes, they have to compete against one another for participating in the nearest block. This means that whoever is ready to pay the most for their block will be able to get a spot in it. Secondly, Bitcoin itself has managed to hit a new high, which means that every BTC, and every Satoshi, is more expensive. Therefore, the Satoshis that were spent last week for sending funds are worth a lot more than they were before the huge price increase. In the last few months, there have been some violent fluctuations in Bitcoin’s fees. 

It has spiked up significantly, only to plummet a bit later. If the same trend is followed this time around, it will only take a couple of days for the transaction fee to come down to normal levels once more. However, it should be noted that all of it is bad. Even though Bitcoin’s gas price does seem to be going up, Bitcoin’s all-time high is 20% more than its last all-time high of 2017. In comparison, the transaction fee is just 25% of what it was back in 2017, which means that it is not a complete loss.