Bitcoin extended losses to $27,500 on Tuesday morning after the sharp drops over the weekend due to ongoing network congestion issues and risk aversion sentiment for cryptos.
BTC/USD pair, 2-hour chart
The selloff in Bitcoin, which was trading at nearly $30,000 over the weekend, started on Sunday after Binance, the world’s largest crypto exchange, tweeted that the Bitcoin network was “experiencing a congestion issue” and that it was temporarily closing bitcoin withdrawals as a result until the network stabilized.
Service on Binance resumed, but later Sunday evening the exchange again halted withdrawals, adjusting their fees to prevent a similar recurrence in the future. In the end, Binance informed the public that all pending Bitcoin withdrawals proceeded and that the team was already implementing solutions to ensure this doesn't happen again.
Overall, mass transactions "spamming" the Bitcoin network lies at the center of the problem, with Binance worsening already nervous crypto market sentiment by repeatedly halting BTC withdrawals blaming "congestion" for the outages.
The sell-off has been extended to the other major digital coins as well, with the price of Ethereum falling from the weekend’s highs of $2,020 to today’s lows of $1,840, Solana tumbled to near the $20 key support level, while Mana continued south to $0.47.
Adding to the negative sentiment, digital currencies have failed to receive safety bets during last week’s U.S. banking turmoil and the failure of the First Republic Bank, alongside the ongoing weakness of the U.S. dollar due to the prospects of a less aggressive Federal Reserve, which traditionally boost the demand for cryptocurrencies.
The risk aversion sentiment, the draining liquidity in the market, and the coming regulations hadn’t helped Bitcoin to rally above the key $30,000 resistance level while the price of Ethereum found strong resistance above the $2,000 key level.
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