Bitcoin Declines as Pressure From Network Congestion Prevails

May 9, 2023

The latest moves in crypto markets, in context

By Lyllah Ledesma, CoinDesk reporter

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Happy Tuesday! Here's what you need to know today in crypto:

Bitcoin declined on Tuesday, trading below the $28,000 mark.
Crypto exchange Bittrex filed for bankruptcy in the U.S. state of Delaware.
Ether staking deposits topped withdrawals for the first time since Shapella.

Latest Prices

CoinDesk Market Index (CMI)

1,214

−13.5 ▼ 1.1%

Bitcoin (BTC)

$27,594

−350.0 ▼ 1.3%

Ethereum (ETH)

$1,842

−17.4 ▼ 0.9%

S&P 500 futures

4,137.00

−15.8 ▼ 0.4%

FTSE 100

7,744.96

−33.4 ▼ 0.4%

Treasury Yield 10 Years

3.52%

▲ 0.1

BTC/ETH prices per CoinDesk Indices, as of 7 a.m. ET (11 a.m. UTC)

Top Stories

Bitcoin continued to drop on Tuesday, falling below $28,000 after pressure from the blockchain's network congestion caused the world's largest crypto exchange, Binance, to temporarily pause withdrawals over the weekend. Binance resumed the service Sunday night (ET). The rest of the crypto market also largely traded in the red, with ether down around 1% on the day. Bitcoin was trading at $27,700 at the time of writing and ether at $1,800. Lido DAO and bitcoin cash both fought the trend, gaining 9%.

Crypto exchange Bittrex filed for bankruptcy in the state of Delaware on Monday, several weeks after announcing it would wind down operations in the U.S. amid a lawsuit by the Securities and Exchange Commission (SEC). The exchange said it has more than 100,000 creditors, with estimated liabilities and assets both within the $500 million to $1 billion range, according to a court filing shared by Randall Reese of Chapter 11 Dockets. The wind down of the U.S. operation and the bankruptcy filing have not affected the company's non-U.S. business, Bittrex Global.

Ether (ETH) holders are rushing to stake their tokens, with network validators pushing deposit activity to the highest level since the Shapella upgrade earlier this year. More than 200,000 ether have been deposited to the network since the start of the week, data from the on-chain analytics tool Nansen show, marking the first time deposits have outpaced withdrawals since Shapella went live last month. The additions bring the number of ether locked for staking purposes to over 19 million tokens – about 15% of the total circulating supply. The influx comes as traders flock to meme coins such as pepecoin (PEPE), which has strained the Ethereum network and sent transaction fees to a 12-month high.

Market Insight: BTC Trades at a Premium on Binance.US

The gap between bitcoin's price in U.S. dollars (BTC/USD) on prominent digital assets exchanges and the price on Binance's U.S. arm – Binance.US – has widened sharply this month, causing unease among crypto commentators on Twitter.

At 09:26 UTC Tuesday, the BTC/USD pair listed on Binance.US traded at a nearly $650 premium to its Coinbase-listed counterpart and to Binance's bitcoin-tether pair (BTC/USDT) – a significant rise from the premium of around $20 seen at the end of April, data from charting platform TradingView show.

According to pseudonymous Twitter-based analyst @fewseethis, the premium on Binance.US likely results from market makers leaving the exchange in anticipation of regulatory action. Market makers are entities tasked with providing liquidity to the order book.

Read the full story by Omkar Godbole

Chart of the Day

The chart shows the seven-day moving average of the number of transactions processed by the Litecoin network has surged to a record high of more than 300,000.
The activity has picked up amid skyrocketing transaction fees and congestion on the bitcoin network caused by the speculation in BRC-20 tokens.
Increased network adoption often brings more demand for the native token. The litecoin-bitcoin pair traded 2% higher at 0.002874 at press time.

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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.