De-Risking by Investors has Led to an Increase in Bitcoin Network Transactions and Fees

The newest data from Glassnode reveals a rush of investors rushing to deposit Bitcoin into exchanges to either reduce their portfolio's risk or preserve their margin positions with more excellent collateral.

As the volume of Bitcoin (BTC) transactions has increased over the last week, blockchain research company Glassnode believes that this is due to investors reducing their exposure to the currency's potential risks.

Last week, the Bitcoin mempool had an unexpected flood of 42,800 transactions. These transactions were probably "urgent" because of the hefty fees paid for every transaction, according to Glassnode's lead analyst. On-chain data tracker BitInfoCharts reports that the average charge increased to $2.72 last week, a 15% increase above the normal average. Glassnode's Monday "Week On-chain" report detailing the results.

Transactions are routed to a mempool before being verified in a block on the blockchain. The more money a transaction costs, the more likely it is to be prioritized above others.

Bitcoin has lost a whopping 20% in the last week, and Glassnode speculated that buyers paid higher-than-average fees to de-risk or increase collateral to their margin holdings. An exchange deposit rate was only 15% linked with payments made for on-chain transactions in May 2021, when there was another wave of large sell-offs.

For most of 2022, BTC outflows from exchanges outperformed inflows. However, last week saw more inflows than outflows, with far more than $50 million more excellent coming in than going out. Last October and November, according to Glassnode, the total amount of exchange-related activity was only exceeded and reached its 2017 bull market top in late December & early January of this year.

Ever since the middle of April, Glassnode has reported that the BTC acquisition has been on a downward trend. The "Shrimps," wallets that carry less than one Bitcoin, accumulated the most in the last week, although even their accrual strength was less than in prior months this year.

In terms of volume, the most significant distributors were those in the entire cohort with at least 10,000 coins in their possession. Through much of 2022, Glassnode reports that distribution has outpaced accumulation. It's also worth noting that the most significant accumulators have much less than one BTC to those with more than 10.

As investors rush to get out of more risky positions, the Bitcoin markets may keep going down their "rocky path" to capitulation, with total fees paid at a local high.

Source: Cointelegraph News