Bitcoin Transaction Fees Hit Lowest Level Since 2017, but It’s Not Due to Weak Demand
A single unconfirmed report has framed Bitcoin transaction fees as back at 2017 lows, but the directly sourced evidence in Galaxy Digital’s research and Glassnode’s latest on-chain note supports a narrower conclusion: low fees trace back to more efficient block-space use and a migration of activity away from the base layer, not a simple collapse in Bitcoin’s economic relevance. The source documents are https://www.galaxy.com/insights/research/why-are-bitcoin-transaction-fees-so-low and https://insights.glassnode.com/the-week-onchain-week-24-2025/.
Galaxy’s Data Points to a Structural Shift
Galaxy Digital wrote that Bitcoin transaction fees remained near all-time lows despite significant user activity and price volatility, and it identified June 2021 as the turning point for the modern low-fee regime. That makes this a network-efficiency story rather than a price story like Bitcoin April Rally Faces a Key Fed Date After Historic Gains.
Galaxy’s explanation starts with SegWit usage, which rose from 53% of transactions on June 1, 2021 to more than 70% by July 1, 2021. In Galaxy’s framing, that shift let more transaction data fit into each block and reduced the amount of fee bidding needed for the same flow of payments.
The same Galaxy research says outputs included in batches of 100 or more moved above 23% in late May 2021, while transactions with more than 3 outputs reached 53%. Galaxy also tied the fee compression to growing Lightning usage and less OP_RETURN-heavy traffic, which is consistent with the idea that each on-chain payment was consuming less scarce block space.
Glassnode Shows Why “Weak Demand” Is Too Simple
Glassnode reports that Bitcoin still settles about $7.5 billion per day on a yearly average even as transaction counts fell in 2025. That mix matters because it shows lower fee pressure can coexist with large settlement flows, much as institutional transfer behavior remains central in stories about corporate crypto use such as Ripple Integrates XRP Into Corporate Treasury Systems.
The same Glassnode dataset says transfers above $100,000 now account for 89% of Bitcoin network volume, while combined spot, futures, and options turnover on exchanges is routinely 7x to 16x larger than on-chain settlement. Those figures support a more careful reading of the headline: value transfer remains concentrated in large entities, but a larger share of overall activity is happening off-chain or on exchanges.
That is also why the strongest available evidence does not fully prove the headline’s “not due to weak demand” claim. Glassnode explicitly says transaction counts fell in 2025, so softer demand for block space by count is still part of the picture even as Galaxy’s data shows efficiency gains were compressing fees. Unlike policy-driven crypto stories such as CLARITY Act Stablecoin Earnings Face Deadline Risk, this is mainly a market-structure and network-design story.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
