As the market continues to decline, Bitcoin and Ethereum usage fees plunge 70%-80%

Over the past few weeks, as the overall cryptocurrency market continues to retreat, transaction fees for Bitcoin and Ethereum have fallen by 81% and 71%, respectively.

According to Bitinfocharts, the average cost of using the Ethereum blockchain fell from $69.92 per transaction on Wednesday to $20.06 on Sunday. During the same period, the spot price of Ethereum (ETH) has fallen rapidly after peaking, falling from Wednesday's all-time high of $4,358 to $3,183 before the publication of this article, a drop of 27%.

Ethereum’s current average fee of $20 would be somewhat of an all-time high before the market surge in 2021. As recently as 2020, the average fee was less than $0.10. The rapid surge in Ethereum fees follows the emergence of decentralized financial applications and the increased attention brought to the blockchain during the 2021 market boom.

According to Bitinfocharts, Ethereum’s daily user count has quadrupled since the beginning of 2020, climbing from about 400,000 to 1.6 million. This figure does not take into account transactions conducted on Ethereum’s second-layer protocol.

A similar trend has been seen on Bitcoin, where transaction fees have fallen 81% since mid-April when the BTC price was close to $65,000. The average transaction fee is about $62.77, marking a new all-time high for BTC, surpassing the 2017 high of $55, which marked the top of Bitcoin's bull run at the time.

Early Monday morning, the price of Bitcoin was $42,440, marking a 34% drop since its recent peak in April. Bitcoin dominance, which measures Bitcoin’s share of the total cryptocurrency market capitalization, fell to as low as 39.9% on Monday, down from a high of 70% in December.

While generally speaking this indicates an inflated altcoin market, this number can be misleading due to the different sizes of crypto market caps at different times. For example, in 2017, Bitcoin’s market dominance was close to 90%, but the global market cap was only $2 billion, or 0.1% today. At the same time, the global market cap figure can be easily inflated by anyone who wants to launch a token with a high supply, even if the initial price of the token is not high.