Bitcoin (BTC) has had a tumultuous start to the week, as the highest fees in two years and a full mempool have put pressure on price action. BTC/USD broke down from $28,000, threatening an exit from its broader trading range. The largest global exchange, Binance, added to the confusion by halting BTC withdrawals three times since the weekend, citing network congestion, and moving large sums of money between wallets. As market participants continue to monitor important levels for BTC/USD, the turmoil marks the start of a week full of potential BTC price volatility catalysts, including macroeconomic data releases and Q1 earnings reports.
Binance Under Fire
Binance, the largest crypto exchange by trading volume, has faced criticism over its handling of withdrawal suspensions. While the exchange cited “congestion” on the Bitcoin network as the reason for the suspensions, core developer Peter Todd argued that BTC is experiencing high demand rather than congestion. He urged Binance to allow users to specify the fee they are willing to pay for withdrawals, stating that it costs around $5 to get an output in the next block. Traders are also paying attention to the bid activity on Binance as BTC returned to the $28,000 mark.
BTC Price Action and Trader Behavior
As BTC/USD trends below $28,000, traders are focusing attention on important levels. Popular trader Captain Faibik is eyeing $27,300 as a line in the sand, while fellow trader Andrew suggested the 50-day EMA as a potential support zone, which currently sits near $27,950. The day’s current low of $27,617 marked Bitcoin’s deepest dip since April 26. Crypto educator Crypto Busy noted that BTC is retesting the .618 level and that Bitcoin as an asset is retesting due to selling pressure and fear, highlighting the importance of self-storage of crypto wallet keys.
Macro Events and Volatility Catalysts
The crypto community is also keeping a close eye on macroeconomic events, with the US Consumer Price Index (CPI) set to print on May 10. Crypto traders anticipate that impressive numbers in the CPI could spark a stock rally, but not everyone predicts positive returns. Popular trader Aqua fears BTC may see a market correction due to tactical selling. Additionally, jobless claims, Producer Price Index numbers, and Consumer Sentiment data are set for release this week. The Q1 earnings reports by major companies also offer potential volatility catalysts for BTC, with four Federal Reserve speakers due to take to the stage.
NVT Ratio and Bitcoin Miners
The high fees and network congestion are having a broader impact on long-term Bitcoin metrics. The network value to transaction (NVT) ratio, which measures the relationship between value moved on-chain and Bitcoin’s overall market cap, hit its highest level in four years on May 8. Created by statistician Willy Woo, the NVT ratio can indicate when a network is in high growth and investors are valuing it as a high return investment or when the price is in an unsustainable bubble. Finally, Bitcoin miners’ BTC reserves are at two-year lows, even though the price of BTC is trending upward. This signals that miners are still dealing with the consequences of the 2022 bear market, which could impact the price of BTC in the long-term.
Conclusion
BTC has had a tumultuous week, with the highest fees in two years, network congestion, withdrawal suspensions, and selling pressure putting strain on price action. The crypto community is keeping a close eye on macroeconomic events and Q1 earnings reports by major corporations for potential volatility catalysts. Additionally, Bitcoin miners’ BTC reserves are at two-year lows, indicating that the 2022 bear market may still be in play. As traders focus on key levels for BTC/USD, market participants are anticipating further price action for BTC in the coming days.
