Bitcoin’s battle with network congestion shows no signs of abating, leading to some of the highest transaction fees seen on the bitcoin network in over two years.
Per transaction, the average cost of sending bitcoin from one account to another is over US$20 (£16), up to 1,000% higher than just two weeks ago.
Source: blockchain.com
Meanwhile, a transaction backlog totaling more than 400,000 has piled up, while the average number of transactions per block has actually doubled.
The reason for this unprecedented wave of congestion?
It all points back to what was originally a fairly harmless protocol called Ordinals, created in January by developer Casey Rodarmor, which allows NFTs to be stored on the bitcoin base layer, something it was never designed to do.
Ordinals have since turned into a tsunami of content flooding the bitcoin network, with up to five million inscriptions minted on the bitcoin blockchain, with half of them in the past week alone.
This is bad news for bitcoin users who want to use it for its original purpose (decentralized transactions), but good news for bitcoin miners, who see a significant increase in transaction revenue.
One thing it doesn’t seem to affect is the actual price of bitcoin – at least not in a positive way.
For the fourth consecutive day, BTC/USDT closed lower on Tuesday with the pair falling 0.15% to close around the US$27,600 price point with an even spread of long and short liquidations in the futures market.
The pair fell a bit more in this morning’s Asian trading session, hovering around USD 27,550 at the time of writing.
Where Will Bitcoin Go After Inflation Was Read? – Source: currency.com
Investors are considering their next move in anticipation of this afternoon’s US inflation.
The market has 5% inflation, although a downside surprise could act as a positive catalyst for the crypto markets.
Currently, BTC/USDT support is pegged at the flat price point of 27k, with resistance at 28k and US$28,200, according to the Binance order book.
Ethereum trades are similarly muted, with ETH/USDT closing less than 0.1% lower at $1,846 yesterday, before settling just below $1,840 this morning.
Binance’s order book shows buying support at 1.8000 and selling pressure at $1860.
Altcoin low season remains
Despite bitcoin’s congestion issues, the benchmark cryptocurrency is still outperforming altcoin blue chips, although the gap has narrowed over the past 24 hours.
Week over week, bitcoin is down 3.8%, compared to Ripple (XRP) at 7%, Cardano (ADA) at 5.8%, Dogecoin (DOGE) at 7%, Solana (SOL) at 5.5%, Polygon (MATIC) at 10% and Polkadot (DOT) at 6.5%.
Only Binance’s BNB token and Tron (TRX) have managed to outperform bitcoin on a week-to-week basis.
Bitcoin dominance (its size relative to the entire cryptocurrency market, currently with a capitalization of $1.14 million) has fallen from a weekly high of 48.74% to 48.22%.
