Bitcoin fell sharply over the weekend, widening its losses after falling sharply over the weekend following reports of “congestion” in the Bitcoin network, one of the world’s largest cryptocurrency exchanges.
the price of Bitcoin It was down about 3.5% at $27,946.39, according to Coin Metrics. It’s down more than 5% since Saturday. ether It fell more than 2% to $1,861.40 on Monday.
“Reports of massive Bitcoin outflows and suspension of withdrawals on major exchanges may be part of the weakness we are seeing. “There have been no major developments as far as price action is concerned, and bitcoin is still pretty limited to a very few days of bullish consolidation,” said Joel Kruger, market strategist at LMAX Group.
“Only a break below $25,000 will be cause for concern. Until then, we believe the decline will continue to be very well supported,” he added.
Monday’s drop saw Binance drop on Sunday as the Bitcoin network “We are experiencing congestion issues” As a result, we temporarily suspended Bitcoin withdrawals until the network stabilized. Some market participants argue that the Bitcoin network is stable and that Binance should prepare for Bitcoin’s high fees environment.
The issue highlights a long-known shortcoming of the Bitcoin network. It wasn’t designed to handle high volumes of transactions at scale. It can only handle 7-10 transactions per second, which makes it unviable as a leading global payment platform. This is an idea that many have been considering for years, but has largely been dormant. This is why projects like Lightning Network, which help speed up transactions without impacting the network, became popular.
Services on Binance resumed, but late Sunday evening, the exchange suspended withdrawals again.
“We have adjusted our fees to prevent similar recurrences in the future,” Binance account said. murmured“We will continue to monitor on-chain activity and adjust as necessary. Our team is also working to enable withdrawals on the BTC Lightning Network which can be helpful in such situations.” .”
“Parabola Spike”
Alex Thorne, Galaxy’s head of companywide research, noted a “parabolic spike” in transaction fees on the Bitcoin network last week, attributed to users minting BRC-20 tokens. Stated. These are experimental tokens on the Bitcoin he blockchain that will eventually allow users to create his NFTs in Bitcoin. They are inspired by his ERC-20 token on Ethereum.
“Demand for BRC-20 tokens, including the transfer of digital collections on the Bitcoin network, is increasing,” said Oppenheimer analyst Owen Lau. We are gradually supporting different types of tokens, and although this adoption should be a positive sign in the long run, it seems the network is slowing down.”
On May 1, about 50% of Bitcoin transactions were in BRC-20 mints, Thorn stressed in a note on Friday. In his 14 days to Friday, Bitcoin’s average transaction fees increased by 297%.