Bitcoin and Ethereum fall sharply after Binance scare
By Álvaro Estevez / Alejandra Zamora
Date: Monday 08 May 2023
(Sharecast News) - Cryptocurrencies face a major downward turn. Bitcoin (BTC) has fallen more than 2% in the last 24 hours to around $28,200, while Ethereum (ETH) has dropped another 2% and is close to $1,850.
To find the main reason behind this fall, one must look to Binance. The world's largest exchange has stopped Bitcoin transactions twice in less than 12 hours due to network congestion that caused a "large volume of pending transactions". According to the company led by Changpeng Zhao, this high volume of unverified transactions was because "our established fees did not anticipate the recent increase in gas rates on the BTC network."
"To prevent a similar recurrence in the future, our fees have been adjusted. We will continue to monitor on-chain activity and adjust accordingly if needed. Our team has also been working on enabling BTC Lightning Network withdrawals, which will help in such situations," Binance explained via its Twitter account.
The number of unconfirmed transactions was approaching 500,000 when the second outage occurred, from around 400,000 when the first one occurred during the early hours of Sunday into Monday. It is now starting to drop, and at around 8 a.m. it was just over 430,000 in a 12-hour period.
CoinGecko data shows that Binance has lost its position in terms of Bitcoin trading volume and is no longer in the top 10 exchanges in terms of Bitcoin trading pairs.
It is also believed that the craze in recent days around meme tokens such as Pepe coin (PEPE) may have affected the reigning cryptocurrency. Some of these transactions have been conducted on the Bitcoin network using the experimental BRC-20 standard, which could have caused this congestion. In the last 30 days, PEPE has risen almost 4,000%, although its price has plunged 50% from the highs reached last Friday, May 5. Numerous analysts continue to warn that this cryptocurrency could be subject to a pump and dump movement, as has already happened with hundreds of projects with similar characteristics, and they stress that its collapse is imminent.
Joe DiPasquale, CEO of BitBull Capital, indicated in statements to 'CoinDesk' that market sentiment has been "on a roller coaster" with meme coin mania at peak. "With PEPE and other meme coins posting high five-figure percentage gains, we wouldn't be surprised if a market-wide rally materializes in the near term," he stated. Furthermore, the expert stressed that Bitcoin has yet to test support levels to the downside and some data would indicate that volatility is easing. "Moving forward, we'd expect a strong bounce off $25K to continue another leg above $30K," DiPasquale added.
In the rest of the market, there have been generalized losses of 3% for the main altcoins.
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