Bitcoin (BTC) begins the new week at the center of fresh crypto industry drama as the highest fees in two years of bullish price action.
Negative volatility is welcome for traders due to the full mempool and the explanations point the finger in multiple directions.
Adding to the confusion, the largest exchange, Binance, has suspended BTC withdrawals several times due to what it calls “network congestion.”
Amidst the turbulence, BTC/USD is showing signs of tension, falling from $28,000 and threatening to break out of its broader trading range.
The events mark a restless start to a week full of potential catalysts for BTC price volatility. These come in the form of the release of macroeconomic data, including the Consumer Price Index (CPI), as well as Q1 earnings reports.
As Bitcoin network metrics begin to show the impact of current network activity, miners continue to sell their holdings, the data shows, leading analysis to conclude that a 2022 bear market is still in play.
Cointelegraph looks at these factors and more in a weekly overview of what’s driving the crypto markets.
Binance CEO Calls ‘FUD’ Amid BTC Withdrawal Suspension
Bitcoin is under pressure at the start of the week, but not for the usual reasons.
As BTC/USD drops to $28,000, observers are keeping a close eye on events on the chain and on the world’s largest exchange, Binance.
The other one has stopped Since the weekend, there have been BTC withdrawals three times, citing “congestion” on the Bitcoin network, while simultaneously moving a huge chunk of money between wallets.
We are aware that some data shows a large volume of outflows from #Binance.
This “outflow” is actually movements between Binance’s hot and cold wallets due to BTC address adjustments.
— Binance (@binance) May 8, 2023
Binance’s moves come at a time when a large number of transactions have entered the Bitcoin mempool, pushing already high fees even further into territory not seen in years.
This had the unintended result of creating the first ever Bitcoin block in which miners earned more from fees than the block grant itself – 6.75 BTC versus 6.25 BTC.
Attention focused on Ordinals and even a crypto investment giant, A group of digital currencies, as a source of transactions. Later, market participants including researcher and investor Eric Wall revealed a potential source of “spamming” in the chain.
tl;dr: the hex derivative (xen) that features EVM chain spamming has targeted bitcoin spamming via the ordinals brc-20 protocol causing a mint type event on the other side pic.twitter.com/3u2KHNpEyu
— Eric Wall ♂️ Taproot Wizard #2 (@ercwl) May 7, 2023
Meanwhile, Binance has come under fire from some of the biggest names in the industry for its policy.
“Bitcoin is not experiencing congestion. It’s experiencing high demand,” lead developer Peter Todd he argued.
“binance can allow users to determine what fee they are willing to pay for a withdrawal and pay that fee. It costs ~$5 to get output in the next block. nbd Good chance @binance has a fractional reserve.”
Binance CEO Changpeng Zhao, also known as “CZ”, indirectly referred to “BTC withdrawal issues” on the exchange, calling it “FUD”.
“Bitcoin Network Fees Fluctuate, 18x a Month,” reads part of the Twitter post established.
As events unfolded, BTC price action felt the strain, with a short-term downtrend continuing at the time of writing.
Analyzing trader behavior and monitoring the source, Skew noted an increase in bidding activity on Binance as Bitcoin returned to the $28,000 mark.
$BTC Binance Spot
Update: Spot buyers around $28,000 and likely to sell around $28.5,000-$28.7,000There’s still decent depth on offer here https://t.co/F1I9UhJETx pic.twitter.com/DSRTwfb5kK
— Skew Δ (@52kskew) May 8, 2023
Traders watch for key levels as BTC price hits 2-week lows
In addition to the immediate events surrounding Binance and fees, market participants continue to monitor important BTC/USD levels.
While the pair is trending below $28,000, popular trader Captain Faibik is looking at $27,300 as a line in the sand.
$BTC Ascending Broadening Wedge Sill in Play..!!
If the Bulls can successfully defend the 27.3k support, we are likely to see a significant bounce back in the coming days.#Crypto #Bitcoin #BTC #BTCUSDT pic.twitter.com/pwERANhUGE
— Captain Faibik (@CryptoFaibik) May 8, 2023
Another tweet of the day highlighted a tightening wedge structure has been established for bitcoin with the logical result of a breakout now set to take place.
Meanwhile, fellow businessman Andrew bet on the 50-day exponential moving average (EMA) as a potential support zone, which is currently near $27,950 and has already been breached on shorter time frames.
Meanwhile, the day’s current low of $27,617 marked bitcoin’s deepest drop since April 26, according to data from Cointelegraph Markets Pro and TradingView.
“BTC retests 0.618 after Binance FUD. This is another bitcoin vs $BTC moment,” explains crypto educator Crypto Busy in summaryreferring to Fibonacci retracement levels.
“Bitcoin as a network is always stable, but exchanges and wallets need more scalable solutions. $BTC as an asset is being tested again due to selling pressure and FUD. Remember, not your keys, not your crypto!”
CPI “good candidate” for increased risk
In terms of macroeconomic events, the week will be marked by the April print of the United States Consumer Price Index (CPI).
On May 10, the CPI will be closely watched for signs that inflation continues to fall, potentially increasing room for lawmakers to ease economic policy.
If there is one data release that could sink or fuel a stock rally, the CPI would be a good candidate. Arrival Wednesday 8:30 a.m. ET.
— Chris Ciovacco (@CiovaccoCapital) May 7, 2023
In April, a slight decrease below market expectations accompanied Bitcoin climbs to new 10-month highs.
The CPI is just one of several important US data sets to be released this week, however, with unemployment figures and producer price index (PPI) numbers.
Four speakers from the Federal Reserve will take the stage as this week marks the last of major corporate Q1 earnings reports.
This week’s key events:
1. CPI Inflation Data – Wednesday
2. PPI Inflation Data – Thursday
3. Unemployment claims data – Thursday
4. Consumer Sentiment Data – Friday
5. 4 total Fed speakers this week
6. The last big week of Q1 earnings
RT & LIKE if you like these weekly previews!
— The Kobeissi Letter (@KobeissiLetter) May 7, 2023
“The numbers are expected to be ‘good looking’, good numbers are expected by the market and partly by prices,” said cryptocurrency trading and analysis account Doctor Profit he said Twitter followers about CPI in the weekly updates section.
The CPI is known to be a catalyst for volatility across cryptocurrencies, but not everyone is predicting continued growth this month, even with positive numbers.
Among them is popular trader Aqua, who has revealed a wider inbound correction in BTC/USD thanks to what he fears is “distribution” – tactical selling.
We’ll take it to 24.8000 nPOC soon, maybe, we have one last increase if CPI data is good, CPI is in 2 days. But it’s increasingly looking like a distribution here and we’re sure to see a market correction in the coming weeks. #Bitcoin #BTCUSD #BTCUSDT #memecoin pic.twitter.com/n4Hp3LB97t
— Aqua (@PayneResidence) May 8, 2023
NVT highlights an overheated network
The uproar over high fees is already having an impact on bitcoin’s long-term metrics.
Among them is the network value-to-transaction (NVT) ratio, which hit a four-year high on May 8.
As confirmed by an on-chain analysis firm GlassnodeNVT is now at levels not seen since 2019.
Created by statistician Willy Woo, the NVT ratio measures the relationship between the value moved on the chain and the total market capitalization of Bitcoin.
“When Bitcoin’s NVT value is high, it means that the valuation of its network exceeds the value carried by its payment network, this can happen when the network is in high growth and investors value it as a high-return investment, or when the price is in an unsustainable bubble ,” Woo explains on his own dating site, Woobull.
Cointelegraph has covered extensively both the NVT ratio and its subsequent NVT signal metric, which contain important nuances that affect how NVT data is interpreted.
Bitcoin miners keep reducing BTC holdings
In a sign that Bitcoin miners are continuing to deal with the fallout from the 2022 bear market, the BTC reserves they are holding are at two-year lows.
Related: Watch these Bitcoin price levels next time BTC drops 3% during a choppy weekend.
As reported by the on-chain analytics platform CryptoQuantthe amount of BTC in miners’ wallets is still on a downward trend, despite the BTC price recovery seen in 2023.
“The return of miners’ interest in holding Bitcoin for longer periods of time will be one of the other valuable factors for price counties to watch out for in the coming days in the market,” Contributor Crazzyblockk he wrote in one of the Quicktake CryptoQuant market updates on May 1st.
The data shows that miners currently hold 1,826,695 BTC as of May 8 – at least since July 2021.
Like Cointelegraph reportedminers faced considerable pressure in 2022 as BTC/USD fell and risked their cost base exceeding any mining revenue.
Last week, separate figures revealed that since 2010, miners’ earnings have nevertheless been totaled over 50 billion dollars.
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This article does not contain investment advice or recommendations. Every investment and trading step involves risk and readers should do their own research when making decisions.
