Bitcoin Network Congestion Forces Binance to Pause Withdrawals, Bitcoin Price Slides
Key takeaways
- Bitcoin withdrawals were halted twice over the weekend, with Binance citing transaction fee processing congestion
- Bitcoin price has slid to the $27,500 mark
- Network congestion due to transaction fee processing is an ongoing issue for Bitcoin
Bitcoin investors have seen another tricky week for the world’s biggest cryptocurrency, as Binance halted withdrawals twice over the weekend. The company said there was nothing to worry about, but Bitcoin prices still dipped as a result.
It’s another reminder that unless they can solve these issues — and shake the image problem — cryptocurrencies face big barriers to entering mainstream markets. Here’s what happened over the weekend and how traders reacted.
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What happened with Bitcoin?
Binance announced over the weekend it needed to pause Bitcoin withdrawals twice due to congestion on the network. The issue was apparently caused by an influx of transaction fees, which has been a long-term issue for Bitcoin’s future viability to compete with Visa and Mastercard.
Binance explained it as “movements between Binance hot and cold wallets due to the BTC address adjustments” rather than a run on Bitcoin as some feared. After seeing how quickly Silicon Valley Bank collapsed as panic spread on social media, reassuring Bitcoin holders was wise.
Binance later tweeted that it had adjusted its fees and would “continue to monitor on-chain activity and adjust accordingly if needed”.
What was the market reaction?
Having dropped around 6.5% in the last five days, Bitcoin is now hovering at the $27,500 figure after being within touching distance of the $30,000 ceiling for weeks. Experts believe the price could fall further should other macroeconomic headwinds or Bitcoin withdrawal halts occur.
The Bitcoin slide had a knock-on effect on other cryptocurrencies: Ether dropped 4.3% on Monday, and smaller coins like Polygon were down 6%. Even Dogecoin was down 3% — and here we thought it was only influenced by Elon Musk’s Twitter feed.
The bottom line
Could we see further issues with Bitcoin’s processing power regarding transaction fees? Quite possibly, which is why Binance has a ‘victim of its own popularity’ problem on its hands. Ethereum tried to solve the problem with its Merge event last year, but as it stands, crypto is still too volatile and with too many teething problems to enter the mainstream yet.
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