Bitcoin and other cryptocurrencies continued to fall on Tuesday amid pressure from the blockchain network’s recent congestion, which prompted Binance, the world’s largest cryptocurrency exchange, to temporarily halt payouts.
Bitcoin’s price is down 1% in the last 24 hours to $27,600, further surpassing the key $30,000 mark that the largest digital asset surpassed in April for the first time since last June, when the crypto -Crash accelerated into a brutal bear market. Bitcoin is struggling to consolidate gains above $30,000 and has not traded near this psychologically important zone since late last month.
“The world’s largest cryptocurrency exchange has twice suspended bitcoin withdrawals due to network congestion,” said Alex Kuptsikevich, an analyst at broker FxPro. “The technical picture shows a local victory for the bears as the sharp drop in price started off the downside resistance that has been in place since the middle of last month.”
The latest catalyst driving prices lower is endogenous to crypto and comes after Binance twice paused payouts, with the exchange citing wildly volatile network fees amid congestion on the Bitcoin blockchain network. Binance, by far the largest place to trade crypto, is of systemic importance to the digital asset ecosystem, and it’s not uncommon for operational hiccups to be felt more severely at the group.
The commotion has created new vulnerabilities for Bitcoin at a time when the asset was already flirting with downside risk below $30,000 and near other key levels.
Advertisement – Scroll to Continue.
“Bitcoin fell decisively below its 50-day moving average of around $28,600 [on Monday]which we labeled as initial/minor support… a breakdown is likely to be confirmed and give way to deeper pullback with next/major support near $25,200,” said Katie Stockton, managing partner of technical research firm Fairlead Strategies. “A breakout of the breakout point near $25,200 would be a major pullback and draw our attention to the 200-day moving average around $22,100.”
More broadly, Bitcoin should continue to respond to key macroeconomic forces, swinging in lockstep with the Dow Jones Industrial Average and the S&P 500, as risk assets remain sensitive to shifting expectations about the future of interest rates. As market participants expect the Federal Reserve to make its last rate hike of the current cycle, inflation data will be closely watched, with the US CPI for April due on Wednesday.
Alongside bitcoin, ether – the second largest crypto – lost 1% to fall below $1,900. Altcoins, or smaller cryptos, were weaker with Cardano down 2% and Polygon down 6%. Memecoins showed more of the same, with Dogecoin down 3% and Shiba Inu down 2%.
Advertisement – Scroll to Continue.
Write to Jack Denton at [email protected]