• Bitcoin’s (BTC) 60% year-to-date surge may be only the first milestone in its upward journey, as miner revenues from transaction fees are rising.
• The two-year “Z-score” for miner revenue from fees, an indicator used to identify periods of high and low transaction fees, has turned positive for the first time since mid-2021, according to data source Glassnode.
• A return of high fees has historically coincided with the beginning of major bull runs.
Bitcoin Miners’ Revenue From Fees Rises Suggesting Onset of Major Bull Run
Positive Z-Score Indicates Return of High Fees
The two-year “Z-score” for miner revenue from fees has turned positive after a long time, signaling new waves of adoption. This indicator is used to identify periods of high and low transaction fees and usually turns positive during bull runs while being negative during bear runs. According to data source Glassnode, this is the first time since mid-2021 that this score has been positive which suggests miners’ revenue from transaction fees is deviating higher from the two year mean in a sign of increased network demand.
Historical Correlation Between High Transaction Fees and Bull Runs
The return of above-average fees on the Bitcoin network points to a bull market ahead. Historically, there has been a correlation between high transaction fees and the beginning of major bull runs. As such, Bitcoin’s (BTC) 60% year-to-date surge may be only the first milestone in its upward journey as miners’ revenues from transaction fee increase.
Analysis From Lead Analyst at Glassnode
Glassnode’s lead analyst James Check commented on this trend saying: “Bolstered by a new demand from Ordinals and Inscriptions, the 2yr Z Score for miner revenue from fees has turned positive”. He added: “Elevated fee pressure is a common precursor to more constructive markets, coincident with new waves of adoption expressed via increasing demand for blockspace”.
Conclusion
The Z score turning positively could be an indication that we can expect more constructive market conditions ahead due to increased demand for blockspace driven by adoption waves which will coincide with higher than average transaction fee rates on the Bitcoin network.