The withdrawal of more than 40,000 bitcoin from the embattled BitMEX cryptocurrency derivatives platform could have possibly driven the cost of transacting bitcoin. The average charges for transferring BTC soared by more than two folds during the previous week, according to data shared by BitInfoCharts. Notably, while BTC transaction fees hiked, those for the smart contracts platform, ethereum, declined.
The recent series of withdrawals from crypto derivatives exchange after federal authorities charged its owners for money laundering might have likely contributed to the surge. Currently, the average fee for validating a bitcoin transaction on the bitcoin network is $4. Contrastingly, the same average cost of transacting BTC stood at $1.5 last Sunday.
Ethereum transaction fee dropping
On the other hand, the cost of processing ethereum transactions increased by more than 50 percent earlier this week. The price of sending ETH tokens climbed from just $2.3 on Sept. 27 to reach almost $4 on Oct. 2, as per BitInfoCharts.
Typically, the cost of transacting cryptocurrencies surge when many people transfer their assets concurrently due to the rise in demand. The miners’ hike the transaction cost as they are scarce compared to the number of transactions. The current data suggest that bitcoin transfer cost has exceeded that of ethereum by two folds. ETH and not BTC is mostly known to have sky-high transaction fees at present.
The inflated fees on the ethereum blockchain have been primarily driven by the recent hype caused by the DeFi ecosystem. Many people have flooded DeFi protocols such as Uniswap, Compound, and Aaave in recent days with massive investments with the hope of enjoying the luxuries on offer in such platforms. Early in September, the average cost of transacting ETH tokens was at a staggering $14, while BTC stood at just a little below $5.
BitMex BTC exodus responsible?
The latest exploits as the average BTC transaction cost eclipses that of ETH, can be attributed to the recent stream of bitcoin outflow from BitMEX. Authorities on Oct. 1 accused the BitMEX of violating AML measures while its owners and some top officials were arrested. As a result, clients began pulling out their BTC from the exchange at an unprecedented scale.