Bitcoin’s Digital Gold Thesis Just Got Real – Here’s Why

For years, crypto evangelists pitched Bitcoin as ’digital gold.’ Now, the data suggests it’s not just hype—it’s functioning like a hard asset in the wild.

Hedge against inflation? Check. Institutional safe-haven flows? Check. Volatility that still gives traditional finance suits night sweats? Double-check. The 2024 halving cemented its scarcity narrative, while ETF approvals threw gasoline on institutional adoption.

Yet Wall Street still can’t decide if it’s a commodity, currency, or some disruptive hybrid—maybe because labeling it would force them to admit their 60/40 portfolios are relics. One thing’s clear: Bitcoin isn’t waiting for permission to rewrite the rules.

Subdued demand in a booming market

Mean transaction fees hover around $1.50 – an anomaly in the context of previous bull markets.

As the chart shows, past rallies in 2017, 2021, and late 2023 saw mean fees spike above $60 and even past $120 due to memory pool (mempool) congestion and surging on-chain speculation.

Source: Alphractal

This cycle, the mempool remains calm with minimal fee pressure, despite Bitcoin’s rising price.

Transactional demand has not increased—users are holding their assets or using centralized platforms instead of moving value on-chain.

Where’s the frenzy?

In past bull markets, Bitcoin’s mempool swelled with tens of thousands of unconfirmed transactions, clear signs of speculative urgency. The current cycle, despite record prices, is quieter.

Source: Alphractal

Mempool activity in 2025 is thin compared to the surges of 2017 and 2021, when transaction backlogs routinely exceeded 150,000. Today,  congestion is minimal, signaling a notable lack of urgency among users.

Traders are increasingly sidelining the base LAYER of speculation, opting instead for faster, cheaper alternatives – or simply holding. The Bitcoin network itself isn’t reflecting the hype.

Quiet success or shrinking retail?

SegWit adoption has soared since 2021, now accounting for the overwhelming majority of Bitcoin transactions. This shift has improved block space efficiency, reduced fees, and enabled smoother throughput.

Yet, the dominance of SegWit today… may be a double-edged sword.

On one hand, it reflects optimization – fewer bytes per transaction. On the other, the relative absence of non-SegWit activity could point to a drop in casual or legacy users.

Bitcoin’s current usage profile seems skewed toward high-efficiency, institutional-scale transactions, not the grassroots, everyday traffic that once clogged the network during retail-driven surges.

Where is the activity going?

Centralized exchanges now handle most transaction flows, while networks like TRON lead retail and stablecoin transfers—especially USDT—due to low fees and instant finality.

Meanwhile, Lightning Network adoption for everyday peer-to-peer payments has slowed, impacted by UX challenges and limited liquidity.

As the crypto industry evolves, users increasingly prefer centralized or highly optimized systems for routine transactions.