Bitcoin price pulls back to $41,000 amidst BTC transaction fee spike

●Bitcoin price suffered a correction, pushing BTC below $41,000 momentarily on Monday. 

●Bitcoin Average Transaction Fee climbs to $38.43 per transaction, highest level in 2023. 

●Crypto experts criticize rising transaction fees on Bitcoin, arguing Layer 1 chains do not scale.

Bitcoin price drops below $41,000 on Sunday as BTC holders engage in profit-taking activities, seen in on-chain data. On December 15, BTC inflow to exchanges hit its highest level since March 2023. Bitcoin analysts on crypto Twitter believe that BTC’s uptrend is close to its end.

Bitcoin sees spike in transaction fees,exchange inflow climbs

Bitcoin Average Transaction Fee (BATF) climbed to 38.43 on December 18, as the network sees an increase in transactions. The average transaction fee on Bitcoin hit a 20-month high since unconfirmed transactions continued to pile up. 

Bitcoin Average Transaction Fee. Source: Yahoo.

On December 16 inscriptions spent nearly $10 million in BTC transaction fees, based on data from Dune Analytics.

Bitcoin daily transaction fees. Source: Dune Analytics

IntoTheBlock data reveals that Bitcoin noted an inflow of $860 million to cryptocurrency exchanges in the past week, the highest level since March. An influx of BTC to exchanges is typically indicative of traders’ intention to sell or book profits and it is likely that investors decided to cash in on profits after BTC’s recent rally. 

Michäel van de Poppe, crypto analyst and trader, believes that we are nearing the end of Bitcoin’s current uptrend. Poppe argues that $48,000 to $51,000 is likely BTC peak and a correction is likely in the largest asset by market capitalization.

Crypto expert behind the Twitter handle @_Checkmatey_ argues that Layer 1 chains do not scale and critiques Bitcoin’s transaction fee spike. The expert commented on the rise in transaction fee and said that previously where BTC blocks were full of monetary transactions only, fees would peak around 350,000 transactions per day. According to the expert, a Layer 1 chain cannot be expected to scale and takes that comment on the viability of Bitcoin transaction fees for people worldwide are irrelevant. 

Technical Analysis: Bitcoin price likely to dip below $40,000 before a rebound

Bitcoin price is likely to suffer a drop below the $40,000 level, to a Fair Value Gap, as seen in the price chart below. Once the gap is filled, BTC price is expected to resume its uptrend and eye the $43,000 target, a level previously seen last week. 

Bitcoin price is currently below the 10-day Exponential Moving Average (EMA), and above two long term EMAs at 50 and 200-days. 

BTC/USDT 1-day chart, Source: TradingView.

A daily candlestick close below the psychological barrier at $40,000 could invalidate the bullish thesis for Bitcoin price.