Bitcoin 'Ordinals' Causing Network Congestion: Will BTC still break 30k?
From Coinbase, Bittrex, Binance, ApeX: The Future of Crypto Trading Amid Network Congestion
Bitcoin Network Congestion from Ordinals, and BTC 30k?
This week attention is shifting away from the Bitcoin price and towards the current network congestion happening on the Bitcoin network. The congestion is due in part to the inscribing of "Ordinals" on the Bitcoin blockchain, which is causing transactions to back up on the network, causing slow confirmations and higher transaction fees than normal.
Ordinals on Bitcoin are creating new business opportunities to grow the Bitcoin ecosystem. Inscribing an ordinal to the blockchain means adding a digital artifact or NFT to the blockchain directly, among other use cases. While it has the potential to add value to Bitcoin, it is currently congesting the network.
Binance temporarily paused BTC withdrawals due to a massive influx of BTC being moved from the exchange, and high fees from congestion on the BTC network from the Ordinals.
Meanwhile, the congestion actually benefited BTC miners because people making Bitcoin transactions had to pay higher fees (to the miners) to get their transactions confirmed before others. One of the BTC blocks had a 12 BTC reward, almost double the regular prize for Mining BTC because of the high fees collected.
Michael Saylor recently tweeted that he would put his last will and testament onto the Bitcoin blockchain through an inscription, which could automatically send $1B+ worth of assets upon his death in a cryptographically verified way.
This is just one use case among millions that we anticipate will be built on top of the Bitcoin base layer application. As the ecosystem grows and developers find more ways to utilize the network beyond being a digital currency, there is another reason to be bullish on Bitcoin in the long term.
So, how is this congestion affecting the price? See below in the Market Analysis section for my predictions on where Bitcoin is headed next.
Crypto Exchanges: Which exchanges grow faster and which die?
The world of digital asset trading is constantly changing, along with developments in the ease of trading, regulation, and usability of DEXs and CEXs. This week, several major events occurred in centralized exchanges, including lawsuits, bankruptcies, and memecoin listings.
Coinbase's decision to sue the SEC for more clarity and guidance on digital assets struck a chord with the crypto community. Over 100,000 active crypto enthusiasts minted the "Stand with Crypto" free Coinbase NFT shield in solidarity with the campaign. You can learn more about the campaign and mint the shield for free to join the efforts here.
In part from the lack of guidance from the SEC on the future of digital assets in America and to expand their operations, Coinbase created and launched “Coinbase International”, essentially creating an offshore exchange.
Registered in Bermuda, it allows international customers to now trade on a new separate Coinbase, including with derivatives, perpetual and higher leverage. You can learn more about their new exchange here.
Bittrex files Chapter 11 Bankruptcy
Another crypto exchange, Bittrex U.S. filed for Chapter 11 Bankruptcy. Months ago they stated their intent to leave the U.S. markets after the SEC filed a lawsuit against them alleging that they operated for years without following securities laws.
Bittrex nearly held 25% of the exchange trading volume back in the 2016-2018 crypto trading times, but shortly after the 2017 bull run their market share slowly slid down until it was less than 1%.
The SEC going after them was the nail in the coffin. Another exchange finished off because of U.S. Regulations (although they were dying anyway).
Operation Chokepoint in the USA continues to find ways to cut-off on ramp and off ramps in the USA to cryptocurrencies from the traditional banking system, with reasoning of protecting US investors.
While DEX’s (Decentralized Exchanges) are still a small percent of the market, I expect them to continue to grow. I am using one of the fastest growing DEX’s, ApeX Protocol, developed and funded from the Bybit venture arm. You can learn more about the exchange and trade for 5% off trading fees using our partner code CryptoCoinShow. Try it and get ahead of others who haven’t used DEX’s yet to get access to coins before they are listed on the main exchanges. Check it out.
Market Analysis:
Bitcoin:
Since our last newsletter, I mentioned that I expected Bitcoin to drop despite seeing bullish signals on the lower time frames. Well, Bitcoin has dropped lower than last week and is currently in the midst of printing a bearish signal on the 12H and 1D timeframes, though we are seeing signs of a small pump this morning, until it breaks the green trendline and builds support on it, we won’t be moving above 30k.
The Lunar eclipse didn't cause much movement in the markets, but the Full Moon the following day (Saturday night) was exactly when Bitcoin dropped from 29k to 27k, its lowest price in weeks.
PEPE:
Despite PEPE emerging out of nowhere as a $1.5B market cap memecoin for a short time, the gamblers who bought the top are now down 55%. These memecoins don't create new value and are mostly a zero-sum game between early contributors and the people they draw into the game later on.
When Binance listed PEPE, it marked the top of the hype phase for PEPE, allowing retail money to easily access the coin without having to learn how to trade on DEXs. Binance listing a coin doesn't give legitimacy to the project; they primarily list these tokens just to capture the transaction fees from all of the trading. Other exchanges have done the same, and Binance doesn't want to miss out on the revenue from traders going all in on PEPE on Binance instead of some other exchange.
Normally, when memecoins pump and people start gambling on all sorts of other projects with no utility or real value, the market learns a hard lesson afterward. Money that is made easily is usually lost even more easily. We could see Bitcoin drop to the 25k range to scare out the retail money who are coming in for a quick dollar.
Total Market Cap of all Cryptos:
The Total Market Cap of all cryptocurrencies (Bitcoin and all Altcoins) also looks bearish and ready for another leg down. The surge of money going into PEPE and other memes created no value whatsoever in the total market capitalization of the market; in fact, it is down overall since the project's inception.
There are bearish signals on the 1D and 2D charts for the total market cap, and I could see a sell-off coming between a 5-10% drop in the coming weeks.
I think we will see this retracement and May will be a red or flat month, but we are still in a high time frame bull market, and eventually, we will see Bitcoin back above 30k and making its way to 35.5k. Remember, markets move up slowly and down fast, and we haven’t been down significantly for a while.
Other Crypto News:
Binance to integrate Bitcoin lightning network (as a solution to high fees and for faster confirmation times).
Sam Bankman-Fried asks judge to dismiss mostly all criminal charges against him in FTX fraud case, citing not guilty
DCG (Digital Currency Group) will not be able to make the $630M payment they owe Genesis Trading on Thursday, as predicted they have been in a financial predicament for more than a few months.
Ex-FOX host Tucker Carlson announces he will be moving to his own independent content exclusive over Twitter video (new video features to come in the near future).
Twitter DM’s will also become end to end encrypted in the coming weeks.
BRICS nations exploring creation of a currency to counter the US Dollar, South Africa's foreign minister confirms
US inflation falls to 4.9%, lower than expectations.
That's all I have for this week. Stay tuned for more in next week's episode!
Ashton Addison
CEO, Crypto Coin Show
Good stuff Ashton!