Bitcoin’s network activity is signaling a shift as daily transaction fees hit their lowest levels in over a decade, sparking concerns about the sustainability of recent market gains.
According to Glassnode, the 14-day average for Bitcoin transaction fees has dropped to just 3.5 BTC — a level unseen since late 2011. This drop comes amid growing market excitement over potential Federal Reserve rate cuts, fueled by Fed Chair Jerome Powell’s recent comments at Jackson Hole, where he hinted that “policy adjustments” may soon be necessary.
Hype Meets Caution: Social Sentiment Soars
While the prospect of rate cuts has boosted bullish sentiment, data from Santiment shows social media mentions of “Fed,” “rate,” and “cut” have spiked to their highest point in 11 months. Historically, such euphoric focus on a single bullish narrative often signals a local price top, as overconfidence builds among traders.
Short-Term Holders Under Pressure
On-chain analysis reveals that a significant amount of Bitcoin supply, acquired between $113,000 and $120,000 since early July, belongs to holders with coins less than three months old. Glassnode’s SOPR by Age metric for these holders sits between 0.96 and 1.01 — suggesting limited profit-taking and increasing vulnerability should selling pressure rise.
Exchange Inflows Hint at Possible Selling
Another red flag is the increasing amount of Bitcoin held on exchanges. Since early June, balances on centralized platforms have surged by nearly 70,000 BTC, reversing a long-term trend of coins leaving exchanges for cold storage. Historically, such inflows precede heightened selling activity, adding downside risk.
Cautious Outlook Despite Long-Term Optimism
Although Bitcoin’s long-term fundamentals remain intact, on-chain metrics like daily active addresses, transaction volumes, and MVRV ratios suggest the market is entering a neutral-to-cautious phase. With speculation around Fed policy driving much of the momentum, analysts warn that excessive reliance on macro-driven hype could set the stage for a pullback.
Bottom line: While the Bitcoin network shows signs of resilience, the combination of ultra-low fees, surging social sentiment, and rising exchange balances suggests traders should tread carefully in the near term.
