A recent spike in transaction fees and repeatedBTC withdrawal outages at Binance have contributed to a turbulent week for Bitcoin volatility that encompasses macroeconomic data releases and Q1 earnings reports. With the highest fees in two years influencing price action, a strained BTC/USD market appears to be breaking down. On-chain disruptions and exchange confusion have added to the uncertainty, with Binance halting its BTC withdrawals several times due to network “congestion.”
As Bitcoin miners continue to sell their holdings amid signs that the 2022 bear market is still in play, industry experts are carefully watching events unfold on-chain and at Binance. A high volume of transactions entering the Bitcoin mempool has kicked fees into an unseen territory, even causing Bitcoin’s first-ever block where miners earned more from fees than the block subsidy itself. Market participants have identified potential sources of the on-chain “spamming,” but the broader implications for the BTC/USD market continue to be debated.
It is widely known that Bitcoin network metrics impact current network activity. However, with recent disruptions causing the long-term analytics, such as the network value to transaction (NVT) ratio, to hit four-year highs, some are questioning whether the price is in an unsustainable bubble. The reduction of BTC holdings by Bitcoin miners, currently at two-year lows, only adds to the uncertainty in the market.
Despite the market hurdles, some industry experts maintain optimism, eyeing important Bitcoin price levels and focusing on factors that could contribute to a growth in price. While traders remain vigilant, concerns surrounding scalability solutions and selling pressure endure.
The upcoming release of the United States Consumer Price Index (CPI) data has the potential to affect crypto volatility further. A positive response to the CPI data could ultimately lead to a broader correction for the BTC/USD market due to tactical selling. With several other important U.S. data sets scheduled for release this week, including jobless claims and Producer Price Index (PPI), the turbulence in the market is sure to attract attention.