Average Transaction Fee

Overview

As the name suggests, the Average Transaction Fee indicator measures the mean amount users pay to execute a transaction on a blockchain on a given day.

Since most blockchains have limited capacity for fitting transactions into a block, transaction fees dynamically increase/decrease based on demand. Due to this nature, high average transaction fees point to periods of high demand.

💡 How can I use it?

Bitcoin Long-Term Average Transaction Fee

Average transaction fees are useful to track the level of demand for transactions on a blockchain. Since bull markets increase demand and lead to FOMO, average transaction fees tend to become more expensive during these periods.

Bitcoin Short-Term Average Transaction Fee

Similarly, as prices begin to fall after a substantial increase in price, average transaction fees tend to increase even further as traders rush to take profits. This tends to be the case as shown in the example above, and also was the case in late 2017.