After reaching its lowest point in nearly two years, the number of active addresses on the Bitcoin network experienced a significant rebound last month, with transactions surging to over 16 million, according to data from The Block Research.
This surge represented a 52% increase compared to April and more than double the number of transactions recorded in May 2022, as indicated by The Block’s data.
The sudden increase in transactions had a corresponding effect on fees, driving them to soar and reach an average of $16.08 on May 11, the highest level observed in approximately two years, according to The Block’s Data Dashboard.
However, this fee escalation was short-lived, as fees subsequently plummeted to just over $4, marking a decline of more than 70%. The Block Research analyst, Rebecca Stevens, emphasized that such rapid fee spikes are not sustainable in the long run.
Stevens noted, “If the cost of transacting on Bitcoin exceeds $15, it is likely to discourage users from engaging in transactions.” She further attributed the wild swings in fees and transaction counts to the frenzy surrounding a type of tokens called Ordinals, primarily memecoins.
It is worth mentioning that a significant portion of Ordinals, which are tokens based on the new token standard for Bitcoin called BRC-20, consisted of memecoins. At one point, the cumulative market value of BRC-20 memecoins exceeded $900 million.
However, similar to the aforementioned data points, the total market value of these tokens has since significantly declined to around $475 million, according to data from brc-20.io, a platform that tracks BRC-20 tokens.