Last updated on May 18th, 2024 at 12:04 pm
Bitcoin’s price drop – Bitcoin and other cryptocurrencies have been experiencing a significant drop in their prices lately. Over the past weekend, Bitcoin lost 4.2% of its value and dropped to $28,000, while Ethereum, the second largest cryptocurrency by market capitalization, saw a 6% decline since Friday.
Why are Bitcoin and crypto prices down today?
One of the main factors contributing to the decline in Bitcoin’s price is the congestion of its network and the exorbitant fees associated with BTC transactions. This congestion is a result of the Bitcoin Ordinals and the introduction of the new BRC-20 token standard, which enables the creation of fungible tokens in addition to Bitcoin. This new token standard has been embraced by the meme coin community and has seen a surge in daily transactions and a market cap of over $160 million this week.
Binance, the largest cryptocurrency exchange by trading volume, has had to halt Bitcoin withdrawals due to congestion on the Bitcoin network. The exchange first announced this on Sunday and then again a few hours ago, citing a backlog of pending transactions. This pause in withdrawals, along with the clogging of the Bitcoin network, may have caused the recent price drop.
We've temporarily closed #BTC withdrawals due to the large volume of pending transactions.
Our team is currently working on a fix and will reopen $BTC withdrawals as soon as possible.
Rest assured, funds are SAFU.
— Binance (@binance) May 8, 2023
However, it should be noted that Bitcoin has been in a consolidation phase for several weeks now after a strong rally at the beginning of the year. While the recent drop has put BTC in its trading range, the overall bullish outlook for Bitcoin remains unchanged.
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It is worth noting that the Bitcoin and crypto market is currently struggling with historically low liquidity due to Operation Choke Point 2.0, which has led to higher volatility. This means that even a few large buy-and-sell orders can move the market significantly.
We’re replacing the pending $BTC withdrawal transactions with a higher fee so that they get picked up by mining pools.
We aim to reopen $BTC withdrawals in the next hour.
— Binance (@binance) May 8, 2023
During the price slump, it was noticeable that Coinbase led the market with spot sales to the downside. However, at press time, BTC is selling at $27,853.18.
While the congestion of the Bitcoin network and the halt in withdrawals at Binance have contributed to the recent drop in Bitcoin’s price, the overall bullish outlook for the cryptocurrency remains unchanged. The low liquidity in the market due to Operation Choke Point 2.0 is also a factor contributing to higher volatility. As always, it is important to view the price movement of cryptocurrencies from multiple angles and not rely on one factor alone.
