Bitcoin’s struggles with network congestion show no sign of abating, resulting in some of the highest transaction fees on the Bitcoin network in over two years.
The average cost of sending bitcoin from one account to another per transaction is over $20 (£16), up 1,000% from just under two weeks ago.
Source: blockchain.com
A transaction backlog of more than 400,000 has now accumulated, while the average number of transactions per block has effectively doubled.
The reason for this unprecedented traffic jam?
Everything points back to an originally fairly harmless protocol called Ordinals, created by developer Casey Rodarmor in January, which allows NFTs to be stored on the Bitcoin base layer, something it was never designed to do.
Ordinals has since grown into a tsunami of content sweeping the bitcoin network, with up to five million inscriptions minted on the bitcoin blockchain, half of them in the past week alone.
This is bad news for bitcoin users who want to use it for its original intent (decentralized transactions), but great news for bitcoin miners who are seeing 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 good way.
For the fourth straight day, BTC/USDT closed lower on Tuesday, with the pair shedding 0.15% to close around the $27,600 price point, with an even split of long and short liquidations in the futures market.
The pair was down a bit more in this morning’s Asian trading session, hovering around $27,550 at the time of writing.
Where Will Bitcoin Go After Inflation? – Source: currency.com
Investors ponder their next move in anticipation of this afternoon’s US inflation.
Market inflation remains at 5%, although a surprise downside could act as a positive catalyst for the crypto markets.
For now, BTC/USDT support is tied to the 27,000 flat price point with resistance at 28,000 and $28,200 according to the Binance order book.
Ethereum trading is similarly muted, with ETH/USDT closing less than 0.1% lower at $1,846 yesterday, before heading just below $1,840 this morning.
Binance order book shows buy support at $1.8k and sell pressure at $1,860.
The altcoin off-season remains
Despite Bitcoin’s congestion issues, the benchmark cryptocurrency is still outperforming altcoin blue chips, although the gap has narrowed over the past day.
Week-over-week Bitcoin is 3.8% lower 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 week-in-week.
Bitcoin’s dominance (its size relative to the overall cryptocurrency market, currently with a capitalization of $1.14 trillion) has fallen to 48.22% from a weekly high of 48.74%.
