Bitcoin’s price fell 4.2% over the weekend, falling back to $28,000. The broader crypto market is also consistently in the red. Ethereum, the second-largest cryptocurrency by market capitalization, has fallen 6% since Friday.
Why are Bitcoin and Crypto Down Today?
As always, Bitcoin’s recent price action should be viewed from multiple angles. In most cases, there is more than one reason. But one factor stands out at the moment. Congestion in the Bitcoin network and extremely high fees for BTC transactions.
The reason for the congestion is the Bitcoin ordinals and the new BRC-20 token standard. Its creation in early March allowed people to create fungible tokens in addition to Bitcoin. Accepted by the Memecoin community, the new token standard saw a rapid surge in daily transactions, pushing its market capitalization above $160 million this week.
Binance, the largest cryptocurrency exchange by trading volume, was the first to announce that it has suspended Bitcoin (BTC) withdrawals on Sunday. According to a Twitter statement, the exchange has stopped withdrawing Bitcoin (BTC) due to congestion in the Bitcoin network.
A few hours ago, Binance once again suspended Bitcoin withdrawals due to a large amount of pending withdrawals. Binance tweeted on May 8 that it had “temporarily” suspended Bitcoin withdrawals due to a “high volume of pending transactions.”
Temporarily closed #bitcoin Withdrawal due to high volume of pending transactions.
Our team is currently working on a fix and will reopen $BTC Withdraw as soon as possible.
Rest assured, the funds are SAFU.
— Binance (@binance) May 8, 2023
2 hours later, binance I have written BTC withdrawals are now possible again, but with higher fees. “Our fees have been adjusted to prevent similar recurrences in the future,” the exchange explained, adding, “We will continue to monitor on-chain activity and adjust accordingly if necessary. Our team is also working on enabling withdrawals on the BTC Lightning Network that can help in situations like this.”
A blockage in the Bitcoin network and suspension of withdrawals on Binance may have disrupted the market and caused the price to drop. Surprisingly, this is not just Binance. At the time of writing, there were 429,000 transactions pending. meme pool included in the block.
On the other hand, it should be noted that Bitcoin’s price has been in a consolidation phase for several weeks after its blazing rally at the beginning of the year. The recent price drop has kept BTC in a trading range, but the overall bullish situation for BTC has not changed.
![bitcoin price](https://www.newsbtc.com/wp-content/uploads/2023/05/BTCUSD_2023-05-08_08-33-06.png)
Last but not least, as Bitcoinists, the Bitcoin and crypto markets are currently suffering from historically low liquidity as a result of Operational Chokepoint 2.0. reportFor this reason, expect high volatility as even a few large buy and sell orders can move the market further.
Delta-based trader @Skew52 explained that it was notable that Coinbase led the market downwards in its spot sale during the price slump. As BTC stabilized at $28,200 at the time of writing, the trader wrote:
$BTC Binance spot. UPDATE: We found a buyer for about $28,000 and expect to sell for about $28.5,000 to $28.7,000.
![Bitcoin Binance CVD & Delta](https://www.newsbtc.com/wp-content/uploads/2023/05/FvlUzYtaUAEFYzQ.png)
Featured image from iStock, chart from TradingView.com