Why Bitcoin, Ethereum and Dogecoin Plunged on Monday

What happened

The crypto market had a turbulent weekend, which has extended into trading on Monday. The fall is caused by some insiders selling Ethereum (CRYPTO: ETH) and Bitcoin (CRYPTO: BTC) transactions slow to a crawl.

As of 2:40 PM ET on Monday, Bitcoin is down 5.3% over the past 24 hours, Ethereum is down 5%, and Dogecoin (CRYPTO: DOGE) has lost 7.8% of its value. Many altcoins are down by double digits, so this is the best corner of the market right now.

Image source: Getty Images.

So what

The fall in Ethereum really started on Saturday when the Ethereum Foundation transferred nearly $30 million worth of tokens to the Kraken exchange, indicating that they may sell tokens to fund operations, which the organization does on a regular basis. This selling pressure is something traders have picked up over the weekend, and it continues today.

Bitcoin fell in part because on Sunday, Binance temporarily closed outlets. The Bitcoin network was extremely congested, and on Sunday there were 395,000 transactions waiting to be confirmed. According to Coindesk, the average transaction fee on the Bitcoin network jumped from $1.20 last week to $20 on Monday, which was the first time it reached that level since Bitcoin topped $60,000.

Dogecoin is one of the most emblematic memecoins or altcoins and it follows its bigger competitor today. But that’s only down a small amount compared to altcoins down double digits today.

What now

The past few months have seen a rapid recovery across cryptocurrency assets, and some of today’s decline could simply be profit. New tokens like Pepecoin have caught the market’s attention and skyrocketed, but that euphoria rarely lasts.

At the same time, some of the biggest problems with crypto’s wider adoption have only been seen in recent days. Gas fees on Ethereum, which are the fees paid to complete a transaction, have increased, and Bitcoin is facing the same problem. High fees make crypto almost useless for anything but the largest transactions, and that has long been a criticism of the industry.

I also think we need to be aware of what Binance is doing in crypto. When companies like FTX and Celsius frozen withdrawals, it was a sign of future collapse. It hasn’t happened at Binance, but as the largest crypto exchange, it’s a critical cog in the industry.

The crypto industry seems to be in much better shape than it was a year ago before a lot of leverage was exposed in the ecosystem, but that doesn’t mean there won’t be similar falls in the market. That’s what investors were worried about, given the activity on Ethereum and Bitcoin. Whether they will have long-term consequences will take time to tell.