Erick Norland argues that currently the price per transaction is very expensive and that this happened at other times of drastic fall: 2010 and 2013.
An economist at CME Group (the exchange that begins trading futures on December 18) believes that the increase in transaction costs could cause a price collapse in Bitcoin.
Erik Norland, executive director and senior economist at US derivatives exchange operator CME Group, published an article that indicates that the rising cost of Bitcoin transactions could be an early indicator of an impending drop in cryptocurrency prices.
The average transaction cost is calculated by dividing the income of the miners, which includes both the transaction fees and the rewards per block, by the number of transactions made in the network. Although it is similarly named, it is important to keep in mind that the transaction cost is a different metric from the average transaction rate, which refers exclusively to the rate that Bitcoin users pay for their transactions to be registered in the Blockchain. .
At present, miners get only 9% of their income from transaction fees; the rest is subsidized through the reward per block. This is the reason why the average transaction fee is much lower than the cost of the transaction, although many users still protest because the rates are too high.
Norland notes that in both 2010 and 2013, the average transaction cost increased just before the severe price corrections. In 2010, the cost per transaction reached parity with the Bitcoin price, which was then valued at approximately USD $ 30. In 2013, Bitcoin soared to about USD $ 1,000 before the collapse of the Bitcoin Mt. Gox exchange, and the transaction cost increased as high as USD 80. It can be seen in the chart:
The current bull market has increased the cost per transaction to around USD $ 74, according to data from Blockchain.info, a factor that Norland says is "ominous" for Bitcoin and could "augur another correction".
With the price of Bitcoin, could the market sustain the transaction costs of USD $ 80, USD $ 100 or more without falling demand and prices? The answer to this question is not known at this time, but it is likely that we will discover sometime in 2018 or 2019. "
Of course, Norland's research does not take into account the fact that Bitcoin, to a certain extent, is used differently than 2010 and 2013. Over the years, users have come to see Bitcoin as a source of value , a kind of "digital gold". This factor, together with rising rates (in relation to its dollar equivalent), has caused a much smaller percentage of users to perform regular transactions of small value. Consequently, the comparison of the current transaction costs with the 2010 and 2013 data may not be a comparison between equals.
However, the research presents traders with an interesting data point, especially when CME and its Chicago rival, CBOE, are preparing to launch Bitcoin futures already.