Bitcoin (BTC) Price Drops Under $28,000 As Binance Halts Withdrawals Twice In 24 Hours

08. May 2023 Posted by Akolkar B on News

Bitcoin (BTC) and the broader cryptocurrency market have come under strong selling pressure as the world’s largest crypto exchange Binance had to pause BTC withdrawals twice on Sunday, May 7.

This happened as the gas fee on the Bitcoin blockchain network suddenly shot up leading to a congestion of all pending transactions. The total number of unconfirmed transactions on the Bitcoin blockchain shot up to half a million.

In its announcement on Monday, May 8, Binance said: “There is a large volume of withdrawal transactions from Binance still pending as our set fees did not anticipate the recent surge in $BTC network gas fees. We’re replacing the pending $BTC withdrawal transactions with a higher fee so that they get picked up by mining pools”.

However, a few hours later, Binance resumed withdrawals for users once again. Commenting on this, Binance said: “Our team has also been working on enabling BTC Lightning Network withdrawals, which will help in such situations. This is a learning opportunity for us and we’ll do our best to prevent this from happening again”.

However, this turn of events led to a strong selling pressure on Bitcoin (BTC). Over the last 24 hours, the BTC price has corrected by nearly 4% and is currently trading under $28,000. As of press time, BTC is trading at $27,867 with a market cap of $539 billion.

Interestingly, the Bitcoin selling pressure intensified soon as the news circulated that there have been massive outflows taking place from Binance. Transactions with 117K and 40K BTC outflows appeared to take place from Binance as per the on-chain data.

However, crypto exchange Binance later issued a clarification that the outflows were part of internal wallet transfers and not actual outflows from the crypto exchange. “We’re aware that some data are showing a large volume of outflows from #Binance. This ‘outflow’ are actually movements between Binance hot and cold wallets due to the BTC address adjustments,” wrote Binance.

However, why did the gas fee on the Bitcoin blockchain shot up significantly? As bitterns out, the reason behind this is Bitcoin ordinals launched earlier this year Bitcoin developer Casey Rodarmor. Bitcoin Ordinals, that follow the BRC20 standard, allowed users to mint non-fungible tokens for the first time on the Bitcoin blockchain. These ordinals have contributed to a massive run up in the network fees and congestion.