Title: Bitcoin network transactions and fees surge amid investor de-risking
May 10, 2022 04:40AM ET
According to Glassnode's latest report, investors are urgently sending Bitcoin to the exchanges to either de-risk their portfolios or protect margin positions with more collateral.
The number of transactions on the Bitcoin (BTC) network has surged in the past week, and according to blockchain analytics firm Glassnode, these are "urgent" transactions as investors seek to reduce risk.
Last week, 42,800 transactions were suddenly added to the Bitcoin mempool. According to Glassnode's senior analyst, these were likely "urgent" transactions due to the high fees paid per transaction. The average fee rose to $2.72 last week, which is about 15% higher than the typical average, according to BitInfoCharts, an in-chain data tracker.
Glassnode reported the results in its "Week On-chain" report on Monday.
On a blockchain network, the mempool is where transactions are sent before being confirmed in a block. The higher the fee paid for a transaction, the more likely it is to be chosen before others.
Glassnode wrote that investors have been paying higher than average fees, likely to favour bids to de-risk their portfolios or add hedging to their margin positions, as the BTC price has fallen 19% in the past seven days. Just over 15% of the fees paid for on-chain transactions correlated with FX margin rates, and these were only higher in May 2021, another period of strong selling.
BTC inflows to exchanges exceeded outflows for most of 2022. This changed last week, however, as inflows exceeded outflows by more than $50 million. According to Glassnode, the total volume associated with the exchanges only exceeded last October and November last year, and reached the bull market peak of 2017 in late December and early January 2018.
Glassnode also noted that BTC accumulation has been trending low since mid-April. "Shrimpers," who hold less than a full bitcoin, were the largest accumulators of wallet cohorts ranging up to whales last week, but even their accumulation strength was weak compared to earlier months this year.