Following reports of congestion on the Bitcoin network, bitcoin and ether both saw a significant drop in value this week. At Monday’s close, it was estimated that the price of bitcoin had decreased 5.3% from $27,420 to $26157.73;
Meanwhile, cryptocurrency prices saw a decline overnight, with Ethereum dropping to as low as $1,813 – 4% lower than its previous high of $1,936. Binance’s rival Coinbase also experienced losses in share price after initially surging following their earnings report last week;
Nevertheless Cathie Wood was swift to leverage the opportunity and purchased additional shares prior to release.
After weeks of steady growth, there has been a slight shift in the Bitcoin market this week. Reports indicate that large outflows and withdrawal pauses at one major exchange are making their mark on its value;
However caution analysts who warn against worrying too soon as it remains confined to an overall bullish consolidation until further news surfaces.
If prices fall back below $25K then we may be looking for more cause for concern but till then investors expect them to remain well supported with few surprises expected from dips.
On Monday, the cryptocurrency market suffered a dip as Binance took action in response to an issue on the Bitcoin network.
The exchange announced Sunday that congestion had caused them to halt withdrawals until conditions stabilized; leading some traders to question if this could have been better managed considering Bitcoin’s usually reliable performance.
Binance experienced a setback which revealed an inherent limitation of the Bitcoin network. With only 7-10 transactions processed per second, it cannot rival traditional payment giants such as Visa or Mastercard in terms of scalability and speed.
This is why projects like Lightning Network exist to fasten up transactions without further stressing out the already limited capacity of this emerging technology’s blockchain infrastructure.
After service resumed on Sunday evening there was another halt with regard to withdrawals; highlighting once again how fragile yet far reaching technological ecosystems can be within our ever evolving digital worldscape.
To help avoid situations like this in the future, Binance notes that it has taken steps to adjust its fees and is actively monitoring on-chain activity.
Additionally, the “Binance team are at work making BTC Lightning Network withdrawals available to promote further scalability”. The Company Tweeted.
Analysts Remarks
Last week Bitcoin saw a dramatic increase in transaction fees, attributed to the unexpectedly high usage of BRC-20 tokens on its network. This experimental token is closely inspired by Ethereum’s ERC-20 token and allows users to create distinct digital assets called Non Fungible Tokens (NFTs) operating within the Bitcoin blockchain.
On May 1st 50% of all transactions were due to these mints – prompting an astonishing 297% rise in mean transaction fees over two weeks before Friday’s report confirmation.
Analysts observe a surging demand for BRC-20 tokens, allowing the transfer of digital collectibles on the Bitcoin network.
This widespread adoption has in turn slowed down the overall speed of its network; however, it’s encouraging to see promising signs long term as more token types like NFTs embrace this technology.
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