First Mover Asia: Binance Congestion Chaos Weighs Heavy on Bitcoin

ALSO: A crypto market analyst calls bitcoin's travails of the past two days "growing pains," and says the largest crypto by market cap "will be fine in the long run."

AccessTimeIconMay 9, 2023 at 12:36 a.m. UTC
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Good morning. Here’s what’s happening:

Prices: Bitcoin and Ether prices are down due to BRC-20 meme coins congestion, with a potential solution being a shift of profits to altcoins and Ethereum.

Insights: Bitcoin's path "is not straight," Paul Eisma, head of trading for XBTO Group, told CoinDesk TV.

Prices

Bitcoin Buckles Under Pressure of Network Congestion Chaos

1,185
−40.6 3.3%
$27,715
−739.6 2.6%
$1,850
−25.5 1.4%
S&P 500
4,138.12
+1.9 0.0%
Gold
$2,029
+11.2 0.6%
Nikkei 225
28,949.88
+NaN NaN%
BTC/ETH prices per CoinDesk Indices, as of 7 a.m. ET (11 a.m. UTC)
CoinDesk Market Index (CMI)
1,185 −40.6 3.3%
Bitcoin (BTC)
$27,715 −739.6 2.6%
Ethereum (ETH)
$1,850 −25.5 1.4%
S&P 500
4,138.12 +1.9 0.0%
Gold
$2,029 +11.2 0.6%
Nikkei 225
28,949.88 +NaN NaN%
BTC/ETH prices per CoinDesk Indices, as of 7 a.m. ET (11 a.m. UTC)

Bitcoin Falls

Good morning Asia.

Bitcoin is beginning the East Asia trading day down 2.6% at $27,715, while Ether is down 1.4% to $1,850.

The Bitcoin network’s Ordinal-induced congestion is to blame, which caused Binance to suspend withdrawals twice over the weekend.

"What's going on right now in bitcoin is, is quite unprecedented. And we haven't really seen this for many, many years," 21Co co-founder and CEO Hany Rashwan said during a recent appearance on CoinDesk TV.

Like others, Rashwan blamed BRC-20 meme coins, but also said that we shouldn’t conflate these with altcoins.

"I wouldn't categorize meme coins in the same league as altcoins like Ethereum or Solana,” he said. “These altcoins are essentially smart contract platforms that facilitate a range of functions, including but not limited to meme coins and NFTs."

Rashwan sees a way out of the congestion which involves meme coin holders taking profits and moving to altcoins and Ethereum, which in turn could lead to those coins increasing in value as well.

But it will take another large macroeconomic event to kick off this move. And for now, we are stuck with Bitcoin NFTs of PEPE.

Biggest Gainers

There are no gainers in CoinDesk 20 today.

Biggest Losers

Asset Ticker Returns DACS Sector
Terra LUNA −13.8% Smart Contract Platform
Gala GALA −10.4% Entertainment
Decentraland MANA −6.9% Entertainment

Insights

Bitcoin's Not-So Straight Path

The meme pool-spurred congestion on Binance and bitcoin’s hefty decline are “growing pains,” but the largest cryptocurrency by market capitalization “will be fine in the long run,” Paul Eisma, head of trading for XBTO Group, told CoinDesk’s “All About Bitcoin” program on Monday.

“It's almost like a deer in headlights for the bitcoin protocol,” Eisma said, linking the latest technical problems to the late 2021 Taproot upgrade, which boosted the bitcoin network’s privacy, among other improvements.

But Eisma said optimistically that bitcoin has remained in a range roughly between $25,000 and $30,000 for much of this year. He said that crypto is still in its formative years, so understandably subject to the same headwinds that have afflicted other early-stage technologies throughout history.

“Like any young and growing, nascent technology that gets upgrades and modifications, this is part of it,” Eisma said. “This is part of the growth and evolution of the network, and the path is not straight.

Eisma said that he will be eyeing Wednesday’s release of the May Consumer Price Index (CPI) for a sense of the U.S. central bank’s next privacy move. The Federal Reserve has boosted interest rates 25 basis points (bps) three consecutive times, but observers of monetary policy, particularly those critical of the Fed, are hoping for a cessation of the bank’s hawkishness.

“What asset markets are looking for is something not too strong or too weak because if something comes in and around, like, I don't know, plus, or minus, you know, some decent, low standard deviation of what's expected, then (it’s) still too early for a pause to rate decreases,” he said. But he added warily that the current inflation rate is still above “the 2% level the Fed is seeking. It's still about the core PCE level that they're seeking as well. So, you know, Powell has been clear that he's going to keep rates at this level for longer than the market is implying.”

Important events.

11:00a.m. HKT/SGT(3:00 UTC) China Trade Balance USD (April)

5:30 p.m. HKT/SGT(9:30 UTC) Australia Budget Release

CoinDesk TV

In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:

Binance has once again resumed bitcoin (BTC) withdrawals after a second pause, as the Bitcoin network suffered from unprecedented congestion. This came as Pepecoin (PEPE) holders may be taking profits on their positions following one of the most spectacular rises in the history of alternative currencies (altcoins). 21.co co-founder and CEO Hany Rashwan shared his crypto markets analysis. Revolut Brazil CEO Glauber Mota and Delta Blockchain Fund founder and GP Kavita Gupta also joined the conversation.

Headlines

Long-Term Bitcoin Holders Add to Their Holdings, Even as Prices Retrace: As longer term bitcoin supply increases, the CoinDesk Bitcoin Trend Indicator (BTI) shows a market in uptrend, despite recent price declines.

Fractional Reserve Banking Is a Fraud (but It's Genius): The modern financial system is built on banks risking customer deposits – and the U.S. government has blocked safer alternatives.

Sam Altman’s Crypto Project, Worldcoin, Releases First Major Consumer Product: Worldcoin’s “minimalist” wallet, World App, wants to help you prove you’re human in the age of AI.

Ripple's Tussle With SEC to Cost the Firm $200M, CEO Garlinghouse Says, Report: The U.S. puts politics ahead of policy, Brad Garlinghouse has said at the 2023 Dubai Fintech Summit.

Block Demand Leads to Fee Spike as Bitcoin-Based Meme Coins Flourish: Over 11,000 tokens have been issued and traded on the Bitcoin network, data shows.

Edited by James Rubin.

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CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.

James Rubin

James Rubin was CoinDesk's U.S. news editor based on the West Coast.


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