Under the promotion of the Rune protocol, which was launched at the same time as the Bitcoin halving, the total transaction fees of Bitcoin recently surpassed Ethereum, reaching a historical high. However, the recent frenzy of Rune-related transactions has declined, with a drop of 98.4% compared to the day of the halving.
According to data from The Block, the transaction fees on the Bitcoin network have increased as a result of the Rune protocol, with the 7-day moving average of Bitcoin’s average transaction fees exceeding $40, which is about 10 times the $4.10 of Ethereum.
At the same time, the total transaction fees of Bitcoin have also surpassed Ethereum, with the 7-day moving average reaching $25.77 million, setting a new record.
The reversal of the market capitalization to transaction fees ratio between Bitcoin and Ethereum is also worth noting. This ratio is obtained by dividing the market value of native assets on the blockchain by the total annual fees paid to the network, similar to the price-to-earnings ratio (P/E Ratio) for traditional companies. Earlier this month, the moving average of the market capitalization to transaction fees ratio for Bitcoin was 2400, while Ethereum was only 118.33. However, on April 25th, the ratio for Bitcoin dropped to 220.77, lower than Ethereum’s 227.12. This is the first time since July 2019 that the 7-day moving average of the market capitalization to transaction fees ratio for Bitcoin has fallen below that of Ethereum.
The Block pointed out that a higher market capitalization to transaction fees ratio may indicate that the asset is overvalued, while a lower price-to-earnings ratio can be seen as the opposite. Although recent changes do not necessarily mean that Bitcoin is undervalued and Ethereum is overvalued, it does reflect the significant demand brought by the Rune protocol and its impact on the Bitcoin network.
However, the phenomenon of Bitcoin’s market capitalization to transaction fees ratio being lower than Ethereum’s is quite short-lived, as the recent decline in the Rune frenzy has led to a slowdown in Bitcoin transaction fees.
According to data from Glassnode, after the halving, Rune-related transactions on the Bitcoin network generated a total of $117 million in transaction fee revenue, with $62.4 million generated on the day of the halving. However, as the Rune frenzy subsided, on April 28th, Rune-related transactions contributed only $1.03 million in transaction fees to the Bitcoin network, representing a decline of 98.4% compared to the day of the halving.
According to data from mempool, the transaction fees on the Bitcoin network have significantly dropped to levels ranging from 19 sat (approximately $1.53) to 24 sat (approximately $1.93) per byte, compared to the levels of 1428 sat (approximately $127.59) to 2232 sat (approximately $200) per byte on the day of the Bitcoin halving, forming a sharp contrast.
Guiriba, a cryptocurrency analyst from research institution Paradigma Education, recently pointed out that out of the over 20,000 Rune tokens that have emerged in the market, only 77 can be considered successful, accounting for less than 0.4% of the total. The profitability is not significant, which may be the main reason for the decline of the Rune frenzy.