Bitcoin threatens to become a settlement layer with nothing to be arranged: Galaxy sounds alarm

Bitcoin’s Fee Market has entered into an unusual phase, asking questions about the fate of the reimbursements and their implications for the economic safety of the network. Since the decline of non-monetary activities such as ordinals and runen at the end of 2024, the use on the chain has fallen sharply.

The result has been a growing number of blocks that make almost no costs clear to users, which is often only 1 Satoshi per virtual byte or less.

Where did all Bitcoin costs go?

For those who want to send Bitcoin quickly and cheaply, this environment seems ideal. But the same cannot be said for miners, who depend on costs to supplement the shrinking block subsidy after the Halving 2024. The collapse of reimbursement pressure reveals a deeper vulnerability in long -term durability, according to the last note shared By Galaxy Digital.

Median daily costs have fallen by more than 80% since April 2024 and from August 2025 almost 15% of all blocks can be classified as ‘free blocks’. At the same time, almost half of the blocks have not reached a maximum weight in recent months, which revealed an unusually thin mempool and emphasized the absence of competition for BlockSpace.

The disappearance of reimbursements can be reduced to various structural changes. One is the dramatic increase and decline of on_return transactions, which divided during the peak of Runes acceptance in 2024, and sometimes good for 40-60% of the daily activities. Their retreat back to around 20% of the transactions have released congestion, which reduces the total reimbursements. Nevertheless, on_return, the debating remains, especially because the upcoming V30 -release of Bitcoin Core makes larger and multiple on_return outputs per transaction possible.

Proponents claim that because this output demonstrably cannot be controlled, they do not increase the burden on the UTXO set. However, critics warn that they consume scarce blockspace that can be used differently for monetary transactions. This has led to concern about spam and sustainability.

Another factor behind weaker reimbursements is the migration of activity away from the basic layer of Bitcoin. Spot ETFs now contain around 1.3 million BTC, which means that the supply is locked that rarely goes into the chain and thereby reduces the transaction question. At the same time, speculative use cases such as NFTs and meme coins have shifted to faster and cheaper alternatives such as Solana, where users find a smoother experience compared to the relatively limited Bitcoin environment.

This relocation means that transactions that once aggressively competed for admission to blocks are now taking place elsewhere, so that the income from the compensation for miners is further undermined.

In addition to the direct pressure, Galaxy also investigated the UTXO set to assess long-term security risks. The analysts discovered that millions of coins remain in old formats such as P2PP and P2PPH, some of which are inherently vulnerable to quantum attacks as a result of exposed public keys. On the other hand, the approval of P2WPKH has grown to dominate unspoken baldi, while Taproot continues to get a grip on advanced use cases.

“Settlyer without arrangement”

For now the break offers a window of cheap transactions, but the image in the long term is more turbid because a falling reimbursement market asks serious questions to network security.

After 2024, miners left with 3,125 BTC in block rewards and miner is increasingly exposed to fluctuations in organic demand. But as BTC activity shifts to ETFs, storage platforms and faster alternative L1s, Galaxy said that the core network runs the risk of becoming a “settlement layer without sufficient settlement activity”. As the dependence on off-chain “paper bitcoin” grows and the reimbursements is drying up, Bitcoin’s long-term protection depends on a level of use that remains uncertain.

“Volatility is nothing new, but Bitcoin needs real reasons to use the chain.”