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Following a remarkable run to $29,700 in the first week of May, Bitcoin is gradually consolidating as the broader crypto market shrinks.
The nascent financial ecosystem seems to have lost steam and has slipped 3.19% to a $1.15 trillion market cap.
The leading cryptocurrency has also retraced and touched $28,800 before making a further downtrend to its current price below the $28,000 price peg.
Could this new week see the crypto king make another bullish push?
Bitcoin Slides in Short Term While Long-Term Forecast Still Strong
The crypto market has enjoyed a good start to life in May. So far, the nascent industry has climbed to $1.21 trillion in a largely hostile global financial landscape.
However, it seems the crypto market is gradually retracing its gains.
As expected, Bitcoin has been the most impacted by the crypto market’s rough seas. In the last 24 hours, the foremost digital currency has dropped by 4.04% to $27,643.41.
The downtrend appears to result from ongoing network congestion caused by large numbers of withdrawals.
At press time, Bitcoin’s 24-hour trading volume is down 1.25% to over $14.183 billion. Its seven-day weekly performance is also in the red zone, with the figure standing at minus 0.26%, while its one-year performance is also down 20.02%.
However, this is where the bearish streak ends. Bitcoin has recorded a climb of 3.78% in the last 30 days and a notable increase of 25.32% in the last 90 days, indicating strong long-term growth.
Its 180 days gain stands at an impressive 39.84% while its year-to-date (YTD) is still in the seventies with a 76.73% so far in 2023.
However, these metrics go against its short-term losses exacerbated by issues with withdrawals.
The Bitcoin price is below the 50-day smooth-moving average (SMA) of $28,659.5y, while its 200-day SMA is still in the green at $21,935.80.
The asset’s relative strength index (RSI) shows that Bitcoin is still underbought at 44.82. Meanwhile, its moving average convergence divergence (MACD) is largely inconclusive or neutral, given that both trendlines are not fully formed to detect the market sentiment.
Bitcoin Blockspace Leading to Higher Fees
The Bitcoin network experienced a surge in traffic in recent days, owing to the popularity of BRC-20 tokens, which follow the steps of the popular ERC-20 token standard.
However, these Bitcoin-pegged fungible tokens do not rely on smart contracts to work and have limited features and functionalities.
They are experimental and meant to add small amounts of arbitrary data to individual satoshis.
Even though they are not so utility-driven, BRC-20 tokens have spiked interest across the crypto space.
Similar to the non-fungible token (NFT) and meme coins craze, which led to higher transaction fees for the Ethereum network, the Bitcoin network has been significantly impacted, with block spaces now selling for a premium.
There are 400,000 pending transactions on the bitcoin network and binance halted transactions due to the congestion and high fees
I’ve been warning people of this for months and the righteous bitcoin maxis have kept their mouths shut because they can’t admit bitcoin has any… pic.twitter.com/jIopTRj7j8
— Crypto Tea (@CryptoTea_) May 7, 2023
The unresolved amount of 400,000 plus transactions in the Bitcoin mempool led many to think the highly secure network may be suffering a denial of service (DDoS) attack.
gn
what happened today was the emergence of the brc-20 asset class
it wasn’t an attack, it wasn’t a ddos
taproot has just made it simple to productize the bitcoin blockspace into any arbitrary protocol
shitcoin trading protocols is an obvious buyer of that blockspace pic.twitter.com/KdAwWLCUEO
— Eric Wall 🧙♂️ Taproot Wizard #2 (@ercwl) May 8, 2023
However, several people have pinpointed BRC-20 assets as the culprit. Miners have found it hard to get block spaces due to the high amount they have to pay.
This is due to the proof-of-fees paid mechanism used by platforms such as Ethereum. If there are limited block spaces for a finite number of requests, only miners who pay more in fees will get allocations.
As a result, Bitcoin transaction fees have skyrocketed, with a report putting it at 6.75 BTC plus an additional 6.25 in subsidy.
BREAKING: #Bitcoin block 788695 contained transaction fees greater than the block subsidy.
6.7 BTC transaction fees + 6.25 BTC subsidy
This is a the first time in history this has ever occurred due to competitively high block space demand. pic.twitter.com/J7IcwzIVKE
— Joe Burnett (🔑)³ (@IIICapital) May 7, 2023
According to a report shared by Binance CEO Changpeng Zhao, Bitcoin transaction fees have increased 18x in the last 30 days due to more transactions occurring on the network.
4. There are some FUD about BTC withdrawal issues. Here is why. Bitcoin network fees are fluctuating, 18x in a month. 🤷♂️🙏
(the screenshot is a google translate version) pic.twitter.com/iYcEx22xMJ
— CZ 🔶 Binance (@cz_binance) May 8, 2023
These issues have since made it difficult for many to make BTC withdrawals from exchanges like Binance.
The world’s largest crypto exchange is planning to integrate the Bitcoin Lightning Network into its framework to mitigate the issue.
Even though BRC-20 tokens are meme coins due to their low utility, they have seen significant growth in a short period.
So far, the meme sub-sector in the Bitcoin ecosystem has recorded over $800 million in market cap compared to Ethereum’s meme coin of $159.42 million.
This shows the large appeal Bitcoin has with many investors despite lacking several functionalities available on Ethereum.
It also points to its unique potential if smart contracts become the norm in the proof-of-work (PoW) protocol in the coming years.
BRC-20 Market Cap: $848.2MERC-20 Market Cap: $159.3B
The icing on the cake is that Bitcoin is double the size of Ethereum. pic.twitter.com/8f6YzHPr9E
— Leonidas.og (@LeonidasNFT) May 8, 2023
Meanwhile, the Liechtenstein government has already passed into law that Bitcoin would be accepted as legal tender for the payment of government services.
BREAKING‼️ Liechtenstein to accept #Bitcoin as legal tender for government services. pic.twitter.com/uDIjyLAGLq
— Bitcoin Archive (@BTC_Archive) May 7, 2023
This further increases the adoption rate for the leading cryptocurrency, making it a more viable payment method for the critically underbanked.
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