Memecoin hype pushes Bitcoin transaction fees to multi-year highs

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Bitcoin transaction fees jumped in early May, reaching their highest point in the past two years, according to data from Crypto Fees.

On May 3, the total amount of fees paid on the Bitcoin blockchain reached $3.5 million, jumping about 400% from the end of April. The average Bitcoin transaction fee reached $7.2, according to YCharts.

The continued trading frenzy of memecoins like Pepe Coin (PEPE) has triggered an undesirable consequence for Bitcoin (BTC) driving its transaction costs to multi-year highs.

Total Bitcoin transaction fees between May 2021 and May 2023. Source: CryptoFees

The latest increase in BTC transaction fees is mostly attributed to an increase in Bitcoin activity involving BRC-20 transactions. According to data from Galaxy Research, 50% of all Bitcoin transactions on May 2 were related to BRC-20 transactions.

Inspired by the Ethereums ERC-20 token standard, BRC-20 is an experimental token standard allowing users to issue and transfer fungible tokens on the Bitcoin blockchain. The standard was introduced in March 2023 by a pseudonymous on-chain analyst known as Domo.

The BRC-20 token standard has quickly become a major trend in the cryptocurrency industry, especially amid the strong growth of the PEPE memecoin. The token has risen over 600% in the past seven days, reaching its all-time high of $0.00000216 on May 5.

30-day PEPE price chart. Source: CoinGecko

The Bitcoin blockchain is not the only blockchain affected by the current memecoin hype. Gas fees on the Ethereum blockchain have also skyrocketed to new multi-month highs recently.

On May 2, ETH transaction fees totaled over $19 million, a level not seen since May 2022, according to Crypto Fees. The Ethereum blockchain remains the most expensive network in terms of transaction fees at the time of writing.

Related: Bitcoin miners have earned $50 billion from BTC block rewards and fees since 2010

Despite the latest spike in Bitcoin transaction fees, the current BTC transaction cost is still far from the all-time high levels. The highest bitcoin transaction fees were recorded in April 2021, when the average BTC transaction cost nearly reached $70 amid a major drop in the bitcoin network hash rate. The previous high point for BTC transaction fees was in 2017, with transaction costs exceeding $60.

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