Bitcoin Transaction Fees Hit Yearly High Amid Institutional Accumulation

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Bitcoin Transaction Fees Hit Yearly High Amid Institutional...

Robert Petrov
20 May, 2025, 06:00
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Bitcoin Transaction Fees Surge to Yearly High Amid Institutional Accumulation

Over the past day, Bitcoin’s (BTC) transaction fees surged by 42%, reaching a yearly peak. The average on-chain fee jumped to $2.40—a $1 increase since the start of May 2025—reflecting strong demand for Bitcoin transaction processing.

Typically, rising transaction fees signal network congestion and heightened competition for block space, which often coincides with periods of intense market activity. Miners prioritize transactions offering higher fees, so when fees spike, it indicates more users—both retail and institutional—are racing to get their transactions confirmed quickly.

However, an intriguing disconnect has emerged: despite the surge in fees, overall transaction volume has fallen to a low of $378,000. This suggests that large entities—whales and institutions—are fiercely competing to validate their transactions, even as general network activity declines.

This pattern points to a slowdown in retail trading, with priority transfers dominated by big players, signaling ongoing accumulation by institutional hands.

Accumulation Confirmed by Rising Illiquid Supply

Supporting this thesis is a sharp increase in Bitcoin’s Illiquid Supply, a metric tracking coins that remain untouched for extended periods. This supply recently hit a new high, indicating that long-term holders (LTHs) are holding steady and not selling.

Specifically, the supply held by long-term holders has grown from 14.3 million BTC to 15.8 million BTC—an increase of 1.5 million BTC—further confirming strong accumulation among savvy investors.

Bitcoin's Sustainability at Risk? Miners Struggle as Transaction Fees Hit Record Lows

The surge in illiquid supply alongside rising transaction fees highlights intensified demand for Bitcoin from large players, driving competition to secure block space.

What This Means for Bitcoin’s Price Action

The correlation between rising transaction fees and institutional accumulation has had a tangible impact on Bitcoin’s price.

As fees spiked, Bitcoin broke through the $105,000 resistance, reaching a high of $107,115 before pulling back. Since then, BTC has retraced to around $102,853, indicating a temporary market cooldown.

Currently, demand from large holders is moderating, while retail participation remains subdued. This environment is conducive to further price consolidation, with long-term holders absorbing the reduced activity from retail traders.

If these conditions persist, Bitcoin is likely to trade sideways between $100,000 and $105,000 in the near term. For a sustained breakout above this range, retail activity will need to rebound to complement institutional bullishness.

A shift in retail sentiment and renewed speculative interest could propel Bitcoin back above $105,000, potentially pushing toward $108,000.