Over the weekend, Binance, the world’s largest cryptocurrency exchange, made headlines as it moved about $4.4 billion worth of Bitcoin (BTC) across its digital-asset wallets in two tranches of 117,000 and 40,000 coins. Explained as a move “between Binance hot and cold wallets due to the BTC address adjustments,” this action raised eyebrows in the crypto community.
Cold wallets are cryptocurrency wallets that securely store private crypto keys offline, typically on a physical device. They offer better security than hot wallets since they are less prone to hacking and therefore less vulnerable to the loss of digital assets. On the other hand, hot wallets are connected to the internet and more susceptible to hacks.
In addition to moving the large sum of BTC, Binance temporarily halted Bitcoin withdrawals twice over the weekend, citing network congestion on the Bitcoin blockchain. The platform suspended withdrawals for several hours late Sunday and again early Monday, attributing the issue to a backlog of pending transactions that were not added to the blockchain due to their low gas fees.
In a tweet, Binance explained that its set fees did not anticipate the recent surge in network gas fees and that it was replacing the pending Bitcoin withdrawal transactions with a higher fee to ensure they would be picked up by mining pools. The exchange has since resumed Bitcoin withdrawals and adjusted its fees to prevent similar issues in the future. Binance also mentioned that its team is working on enabling BTC Lightning Network withdrawals, which would help in situations like this.
The recent spike in unconfirmed transactions, currently standing at over 400,000, can be partly attributed to the increasing adoption of Ordinal inscriptions, equivalent to nonfungible tokens (NFTs) minted on the Bitcoin network. Notably, Bitcoin recorded a new all-time high for daily transactions last week following the acquisition of First Republic by JPMorgan Chase. Data from crypto statistics platform BitInfoCharts showed that the daily number of Bitcoin transactions reached over 568,300 on April 30, almost 78,000 more than its previous peak during the 2017 bull run.
At the time of writing, Binance’s 24-hour trading volume has surpassed $7.6 billion, more than eight times that of the next-largest crypto exchange, Coinbase. Meanwhile, the flagship cryptocurrency is currently trading at $27,913.64, down by 3.4% over the past 24 hours.