Bitcoin’s Fee Crisis Deepens as ETFs Dominate Flow, Solana Captures Retail Activity

While Bitcoin’s price hovers near all-time highs, the underlying network tells a different story. Transaction fees have collapsed to near-decade lows, revealing a stark disconnect between market price and onchain usage — and raising fresh concerns about miner sustainability.

According to Glassnode data, fee activity has diverged sharply from price performance. Unlike prior bull cycles, where rising prices triggered bidding wars for blockspace, this cycle’s fee curve remains flat. Median daily fees have plunged over 80% since April 2024, Galaxy Research reports, with some 15% of daily blocks clearing at just 1 sat/vbyte. Nearly half of recent blocks are underfilled, reflecting low demand and a quiet mempool.

This shift highlights a structural change in how Bitcoin functions. More than 1.3 million BTC are now held within spot ETFs and custodial platforms — coins that seldom re-enter onchain circulation. At the same time, retail activity has largely migrated to Solana, where users favor its faster, cheaper execution for memecoins and NFTs.

The net result is a decoupling between price and network activity. Bitcoin’s market valuation is increasingly driven by institutional flows into ETFs, while the chain itself shows signs of stagnation.

That divergence is taking a toll on miners. With block rewards halved to 3.125 BTC and fees contributing less than 1% of revenue in July, miner margins are tightening. In response, several publicly traded mining firms are pivoting into AI and high-performance computing (HPC) services to offset declining profitability.

If fee-based security was once the long-term hope for Bitcoin’s sustainability, 2025’s trends are calling that vision into question.