Crypto On-Chain Fees Hit $9.7B in H1 2025 as Bitcoin Drawdown Looms: What’s Next for Protocol Costs?

Users paid $9.7 billion in on-chain fees during the first half of 2025, according to data from 1kx. This represents a 41% increase year over year and is the second-highest total on record. The firm projects that on-chain fees could surpass $32 billion in 2026, fueled by accelerating growth in crypto applications.

The report highlights that a Bitcoin drawdown may act as a stress test for protocol fees, revealing which costs are sustainable and which are exposed to market volatility. 1kx’s April sector analysis found that nearly every crypto fee category exhibits a positive correlation with Bitcoin’s price. However, the firm notes significant dispersion across sectors, with the critical variable of downside beta remaining unresolved.

For example, a 0.6 correlation can yield vastly different outcomes depending on whether sector fees decline at 0.8x Bitcoin’s pace or 1.5x. The firm identifies decomposed upside versus downside fee sensitivity as a key factor in understanding these dynamics.

Bitcoin Miner Fees Near Zero as Mining Costs Soar

Related research indicates that Bitcoin miner fees are approaching zero, even as the cost to mine nears $80,000. Mining difficulty is expected to drop by 5% in the coming weeks. With fees contributing almost nothing to revenue, miners are increasingly reliant on Bitcoin’s price, operational efficiency, and cost control as the next market reset approaches.

The Reflexive Fee Cluster: Sectors Most Tied to Bitcoin’s Price

1kx identifies several crypto sectors as highly correlated with Bitcoin’s price, sharing a common economic architecture that thrives in bull markets and falters in downturns—often at a faster rate than Bitcoin itself. These sectors include:

• Liquid Staking and Restaking: Fee streams depend on yields that expand as borrowed capital and risk appetite grow, and contract as they decline.
• Vault Curators: Assets flow in during positive price momentum and out when sentiment reverses.
• Launchpads: Launch activity accelerates in bull markets and stalls when confidence wanes.
• Automation and DeFAI Protocols: Fees are tied to transaction activity and strategy deployment, tracking the same directional pulse as Bitcoin.

The report also examines layer-1 (L1) blockchains, noting that their fee correlation to Bitcoin varies widely. Many L1s inherit market direction through native token price movements and activity mix, while others show more independence based on their application base. Despite this variability, most L1s still carry meaningful Bitcoin sensitivity in their fee structures.

The Delivered-Services Layer: DePIN as the Outlier

DePIN (Decentralized Physical Infrastructure Networks) stands apart in 1kx’s framework as the lowest-correlation category, earning the distinction as the standout for independence from Bitcoin’s price movements.

"In crypto, a fee line can look like a business in an up market and still trade like amplified BTC beta when macro fear arrives."

1kx emphasizes that the reflexive nature of these fee clusters means their growth during bull markets reflects not only business momentum but also the same macro tailwinds that lift all risk assets. When investors discuss fee growth in these sectors, they are often describing a combination of genuine business expansion and the broader speculative activity driving Bitcoin’s price.