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Chris Ratcliffe | bloomberg | Getty Images
Bitcoin retreated as the week began, extending losses from a sharp decline over the weekend following reports from one of the world’s largest cryptocurrency exchanges about “congestion” on the Bitcoin network.
price bitcoin It was about 3.5% lower at $27,946.39, measured by Coin. It is down more than 5% since Saturday. ether It fell more than 2% on Monday, to $1,861.40.
“Reports of a large influx of bitcoin and withdrawals being paused on a major exchange may be a factor in some of the weaknesses we see. However, in the end, there weren’t any major developments in terms of price action, with bitcoin continuing to trade significantly. Much is limited to the multi-day bullish consolidation, said Joel Krueger, market strategist at LMAX Group.
“Only a break below $25,000 would give cause for concern. Until then, we think the lows will continue to be very well supported,” he added.
Bitcoin (BTC) is slipping after reports of network congestion
Monday’s drop came after Binance tweeted on Sunday that the Bitcoin network was “Encountered congestion” Bitcoin withdrawals were temporarily closed as a result until the network stabilized. Some market participants argued that the Bitcoin network is stable and that Binance should be prepared for a high-fee environment for Bitcoin.
The problem has highlighted a long-known drawback of the Bitcoin network: It was not designed to handle a large amount of transactions on a large scale. It only processes 7 to 10 transactions per second, making it a potential competitor to companies like Visa and Mastercard — an idea that many have explored over the years but has largely stalled. This is why projects like the Lightning Network, which help speed up transactions without affecting the network, have gained so much popularity.
The service resumed on Binance, but later on Sunday evening, the exchange halted withdrawals again.
To prevent a similar recurrence in the future, our fees have been modified chirp. “We will continue to monitor on-chain activity and adjust accordingly if necessary. Our team is also working on enabling BTC Lightning Network withdrawals, which will help in such situations.”
parabolic height
Alex Thorne, head of company-wide research at Galaxy, pointed to a “parabolic rise” in transaction fees on the Bitcoin network last week, which he attributed to users minting BRC-20 tokens. This is a demo code on the Bitcoin blockchain that eventually allows users to create an NFT on Bitcoin. It is inspired by the ERC-20 token of Ethereum.
“There is a growing demand for BRC-20 tokens, which include the transfer of digital holdings on the Bitcoin network,” said Oppenheimer analyst Owen Lau. “The Bitcoin network has gradually supported different types of tokens such as NFTs. This adoption should be a positive sign in the long run but it seems to be slowing down the network.”
On May 1, about 50% of bitcoin transactions were BRC-20 tokens, Thorne explained in a note on Friday. In the 14 days leading up to Friday, the average transaction fee for bitcoin increased by 297%.
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