Bitcoin Price Dips Closer to $400 Following Network Disruptions

While the bitcoin network’s capacity challenges generated substantial visibility this week, the digital currency enjoyed robust trading volume.

AccessTimeIconMar 4, 2016 at 7:13 p.m. UTC
Updated Sep 14, 2021 at 1:59 p.m. UTC
Layer 2

Markets Weekly is a weekly column analyzing price movements in the global digital currency markets, and the technology's use case as an asset class.

CoinDesk - Unknown

While the bitcoin network’s capacity challenges have been generating substantial visibility, the digital currency enjoyed robust trading volume this week, with market participants transacting more than 28m BTC in the seven days through 12:00 UTC on 4th March.

Likewise, bitcoin's price was relatively stable, falling less than 1% heading into 12:00 UTC on Friday. This figure increased to 3.3% as the price deflated to $409 by 23:59 UTC, figures from the CoinDesk USD Bitcoin Price Index (BPI) reveal.

This figure was $10 higher last week when bitcoin traded at $421.01 at 00:00 (UTC) on 26th February. The relatively modest decline was comparable to movements from week before, when bitcoin climbed only 1% after fluctuating between $410 and $450.

Still, the digital currency experienced sharp gyrations this week amid news that the network was exceeding its capacity for transactions, a development that resulted in users paying sometimes substantially higher fees.

Overall, volatility was tight this week, as bitcoin enjoyed gains on 26th February, rising 2.9% to $431.69 by 23:00 (UTC). The currency hit a local peak over the next few hours, reaching $434.14 by 02:00 (UTC) on 27th February.

Bitcoin then dropped within the next 24 hours or so, hitting $422.07 at 01:00 (UTC) on the following day. This represented a 2.8% decline.

This volatility continued, as the digital currency surged to $440.48 by 10:00 (UTC) on 29th February, 4.4% higher than the low of $422.07 bitcoin encountered early the day before. The currency quickly lost some of these gains, depreciating to $431.26 at 07:00 (UTC) on 1st March.

Bitcoin continued to waver between $420 and $440, before reaching $419.56 and then $416.30 at 00:00 (UTC) and 05:00 (UTC) on 3rd March.

For the remainder of the week, the currency largely fluctuated between $415 and $425, before ending under $410.

CoinDesk - Unknown

coindesk-bpi-chart (2)

Blockchain doubts

The price dip could be considered small, however, given the mounting uncertainty surrounding the future of the network.

Recently, bitcoin generated substantial media attention as users faced both longer than average wait times and in some cases, sharply higher fees. As the blocks on the blockchain filled, potentially due to the actions of a single disruptive entity, a backlog of transactions awaiting processing developed.

This problem has persisted as bitcoin enthusiasts are locked in a debate surrounding how to address the steadily deteriorating space.

While one group, Bitcoin Core, has been working on a solution that would increase capacity by reworking how signatures are stored, Bitcoin Classic has published code that would double the transaction capacity of the blocks.

As developers and market observers work toward a solution, users are running into challenges associated with fees.

Because of these challenges, some transactions are going unprocessed, and others are being severely delayed, issues that may have affected overall sentiment even if it did not affect price.

Since exchange users must pay to send bitcoin deposits to exchanges, users who paid fees that were too low may have seen deposits rejected.

Representatives of some exchanges, however, said this may have mainly affected operations at industry businesses, which need to pay extra fees when sending users bitcoin funds in withdrawals.

Charles L. Bovaird II is a financial writer and consultant with strong knowledge of securities markets and investing concepts.

Follow Charles Bovaird on Twitter here.

Man holding rock image via Shutterstock


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.


CoinDesk - Unknown
Three Arrows Paper Trail Leads to Trading Desk Obscured Via Offshore Entities

As Three Arrows Capital collapsed under market pressure, its much-lesser known trading desk, TPS Capital, remained active, sources say. But a complex ownership structure might frustrate creditors' efforts to collect.

CoinDesk - Unknown
CoinDesk - Unknown
June Was Bitcoin’s Worst Month Ever

Plus, European crypto regulation comes into view.

CoinDesk - Unknown
CoinDesk - Unknown
What Traders Are Saying About Bitcoin's Biggest Monthly Loss in 11 Years

Poor macroeconomic sentiment, fears of inflation and systemic risks from the crypto market pushed the cryptocurrency below 2017’s highs.

CoinDesk - Unknown
CoinDesk - Unknown
Three Arrows Capital Files for Bankruptcy in New York Tied to British Virgin Islands Proceeding

A British Virgin Islands court ordered Three Arrows' BVI branch into liquidation earlier this week.

CoinDesk - Unknown