Bitcoin Drops Significantly Below Key Level as Binance Woes Weigh on Crypto

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Bitcoin and other cryptocurrencies continued to fall on Tuesday under pressure from recent blockchain network congestion that prompted Binance, the world’s largest crypto exchange, to temporarily suspend withdrawals.

The price of Bitcoin has fallen 1% in the past 24 hours to $27,600, dropping even further from the key $30,000 level that the largest digital asset surpassed in April for the first time since last June. when the crypto crash accelerated into a brutal bear market. Bitcoin struggled to consolidate gains above $30,000 and has not traded near this psychologically important zone since late last month.

The world’s largest cryptocurrency exchange has twice suspended Bitcoin withdrawals due to network congestion, said Alex Kuptsikevich, an analyst at brokerage FxPro. The technical chart shows the local victory for the bears, with the sharp decline in price having started from the downside resistance in place since the middle of last month.

The latest catalyst driving down prices is endogenous to the crypto and comes after Binance suspended withdrawals twice, with the exchange citing wildly fluctuating network fees amid congestion on the Bitcoin blockchain network. Binance, by far the largest crypto exchange, is systemically important to the digital asset ecosystem, and it’s not uncommon for the group’s operational issues to be felt more broadly.

The tumult created new vulnerabilities for Bitcoin at a time when the asset was already flirting with downside risk below $30,000 and close to other important levels.

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Bitcoin has fallen decisively below its 50-day moving average around $28,600 [on Monday], which we referred to as initial/minor support, a breakout is likely to confirm and give way to deeper pullback, with next/major support near $25,200, said Katie Stockton, managing partner at the technical research company Fairlead Strategies. A breakout of the breakout near $25,200 would be a bigger setback, drawing our attention to the 200-day moving average around $22,100.

More broadly, Bitcoin should continue to react to key macro forces, moving in step with the Dow Jones Industrial Average and the S&P 500, as risky assets remain sensitive to shifting expectations about the future of interest rates. As market participants expect the Federal Reserve to have made its final rate hike in the current cycle, inflation data will remain closely watched, the US Consumer Price Index (CPI) for April being expected on Wednesday.

Beyond Bitcoin, Ether is the second largest cryptolost1% to fall below $1,900. Altcoins, or smaller cryptos, were weaker, with Cardano plunging 2% and Polygon 6% into the red. Memecoins showed the same, with Dogecoin down 3% and Shiba Inu losing 2%.

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Write to Jack Denton at [email protected]

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