Trader pays $ 3,000 fee to sell 0.22 Bitcoin (BTC) that he received as payment

Excessive fee charged to the user is a result of using Blockchain.com’s API, which creates a new address for each payment in Bitcoin.

A Brazilian merchant who accepts Bitcoin (BTC) as a form of payment was surprised by a fee of almost R$ 3 thousand, which was charged to withdraw the balance he had in cryptomoedas at Blockchain.com.

In total, the owner of the e-commerce business paid US$ 544.39 of fee, to transfer 0.22298819 BTC, or yet, R$ 2.881,51, considering the quotation of the American dollar this Friday (15).

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According to a posting in a Facebook group about the case, the user uses an API from Blockchain.com to receive the payments. However, for each transaction, the API creates a new address for the merchant, which generated multiple fees at the moment he decided to sell the balance in Bitcoin.

High fee to withdraw Bitcoin

The high fee charged for the withdrawal of about 0.22 BTC happened due to the number of addresses that the user created automatically. For each amount received in cryptomoedas by him, a new address was created in the Bitcoin network.

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In this way, it is as if a new portfolio was created for cryptomites in each sale that the e-commerce made, with payment in BTC. In total, the 0.22 BTC withdrawal corresponds to 150 sales, that is, 150 addresses were generated, as explained by the cryptomote seller, Michel P2P.

„Each Bitcoin address you receive within the same portfolio is called an input. Each address has a cost for exit, which is charged by the miner“.

Cryptomoedas as payment method

The trader from the interior of Goiás who receives cryptomoedas as a form of payment decided to accumulate 0.22 Bitcoin before exchanging the entire balance for Brazilian Real.

Thus, by accumulating 150 payments in BTC, the user sold the fraction of cryptomoeda through a transaction via P2P. Without being able to manage the addresses that are created, he said that after each sale a new Bitcoin address is created by the API.

„I have an ecommerce that I receive Bitcoin as payment. There, they generate several different portfolios. The system is automated. After the customer makes the payment, the order transaction is approved, and for each customer a different address is generated“.

150 addresses were created with the payments in Bitcoin (Reproduction/Facebook)
API was responsible for billing

Right after paying a fee of almost $ 3,000 to withdraw the Bitcoin he received, the Brazilian merchant said he should look for alternatives to the API of Blockchain.com, which charges a fee for each payment in cryptomoedas.

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With the sale in Bitcoin by the trader via P2P, he received approximately $ 44 thousand for the balance in BTC, in addition to the fee of almost $ 3 thousand that was discounted by the network.

According to Michel P2P, the fee of the BTC network was normal at the time of negotiation with the owner of the Brazilian e-commerce. However, the problem was in the excessive number of addresses created, to receive payments in Bitcoin.

„He has 150 addresses. Each one of them pays its exit fee, and added together they give that amount. The fee was even low, of 60sat/b practically, but, for being so much input, it gets high“.

How the massive activity of Bitcoin buyers in Coinbase drove the price of BTC to over $32,000

The price of Bitcoin rose to over $32,000 when Coinbase buyers aggressively built up BTC.

Coinbase has seen a big spike in buyer activity during the early hours of the morning, as the price of Bitcoin (BTC) exceeded USD 32,500 on January 2. Analysts say the trend was reminiscent of MicroStrategy’s Bitcoin buildup, possibly fueled by institutional buy orders. As a result, BTC rose above USD 31,000, reaching a new all-time high.

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Coinbase buyers were the catalyst for Bitcoin’s price increase
In the last 48 hours, Coinbase has consistently seen a high premium compared to Binance. At one point, Bitcoin’s price on the exchange was $100 more than Binance.

When Bitcoin’s price exceeded $30,000, the premium reached $350. For example, when Bitcoin was trading at $30,000 on Binance, BTC was priced at $30,350 on Coinbase.

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Before the rally, CryptoQuant CEO Ki Young Ju said Coinbase’s low exits posed a risk to Bitcoin’s rebound. He said the exits would have to increase for BTC to find new momentum, which it did. Ki said before the rally:

„We have had no significant exits from Coinbase since the $23k, the token transfers are decreasing and the cash flow rate of all exchanges is increasing. It is still possible that institutional investors will join soon, but we could see a correction if this continues“.
As Bitcoin approached $29,500, Coinbase’s outflows began to rise. Ki said that these are possible OTC deals, which are often optimistic for BTC and exemplify a broader trend of declining BTC reserves on exchanges.

As we pumped, another 34K btc casually pulled out of the exchange in the last few blocks.
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High net worth buyers use the open market to buy or sell large quantities of Bitcoin. Therefore, when the signs of OTC deals emerged, Ki said this was positive for BTC. Just two days after the outflows increased, BTC surpassed USD 30,000, reaching USD 31,400 shortly thereafter. Ki pointed out before BTC broke $30,000:

„12,063 $BTC has just come out of #Coinbase. They went to multiple cold wallets. Possibly OTC deals. Breaking the 30k is going to be difficult, but the institutions don’t care. They just buy it more.

Leaving #Coinbase. Source: CryptoQuant
Why is BTC becoming so attractive?
According to Ashwath Balakrishnan, an analyst at Delphi Digital, Bitcoin became more attractive when it surpassed its historical high.

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When the price of Bitcoin was around USD 4,000, the risk of a significant fall was high, combined with great uncertainty about BTC’s medium-term outlook.

Therefore, when Bitcoin managed to exceed USD 20,000, the dominant cryptomone became more attractive to investors. He said:

„Buying $BTC after its historical high is really superior to targeting the fund from a risk-adjusted lens. If you bought at $20k you are up 50% with minimal friction between the fund’s buyers ~ $4k are up almost 8 times but their risk of exploding was much higher“.
In the short term, a popular narrative that could drive up the price of Bitcoin is the prediction that institutions might not have bought BTC in December due to potential accounting problems.

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As such, some analysts say that more institutions could jump to Bitcoin in the first quarter of 2021. If this happens, which would be evident through the assets under management of Grayscale and the open interest of the WEC’s Bitcoin futures market, it would probably cause a wider BTC rally.