Bitcoin's Rising Transaction Fees Signal Increased Demand for Blockspace

According to data from The Block, Bitcoin's transaction fees have risen alongside its price, signaling increased demand for the blockspace of the world's largest cryptocurrency.

Bitcoin's price has soared to new highs, and transaction fees are also rising, signaling increased demand for the world's largest cryptocurrency's blockspace.

On Sunday, Bitcoin's price reached nearly $106,000, surpassing a recent high of $105,600 seen on May 12. After a slight dip, BTC is currently being traded at around $104,500.

As Bitcoin's price climbs, so do its transaction fees. The seven-day moving average transaction fee has increased by $1 since the beginning of May, reaching $2.40. This is the highest fee recorded so far in 2025, as reported by The Block.

Along with the increment in fees, Bitcoin's dominance has also seen a slight rise, recovering from a dip two weeks ago. This could suggest that the recent price pullback in Bitcoin compared to other cryptocurrencies was likely caused by liquidity issues rather than a shift towards an "altcoin season."

Interestingly, the increase in transaction fees seems to be balanced by a decrease in the average number of daily transactions. On April 22, BTC processed 507,000 transactions, but that number has decreased by 35%, dropping to 330,000, according to The Block's data.

Also, Bitcoin's illiquid supply, which is defined as BTC held in wallets with minimal spending activity, has reportedly reached an all-time high, according to data from Glassnode.

The decrease in the supply of Bitcoin available on exchanges suggests that a surge in demand could result in a supply shock, potentially driving prices even higher.