Binance ‘FUD’ meets CPI — 5 things to know in Bitcoin this week

Bitcoin (BTC) starts a new week at the center of fresh crypto industry drama as the highest fees in two years pressure price action.

Downside volatility is greeting traders thanks to a full mempool, and explanations point the finger at multiple parties.

Largest exchange Binance is adding to the confusion, pausing BTC withdrawals several times over what it calls network “congestion.”

Amid the turmoil, BTC/USD is showing signs of strain, breaking down from $28,000 to threaten an exit of its broader trading range.

The events mark a flustered start to a week already full of potential BTC price volatility catalysts. These come in the form of macroeconomic data releases, including the Consumer Price Index (CPI), as well as Q1 earnings reports.

As Bitcoin network metrics begin to show the impact of current network activity, miners are still selling their holdings, data shows, leading analysis to conclude that the 2022 bear market is still in play.

Cointelegraph takes a look at these factors and more in the weekly rundown of what’s moving crypto markets.

Binance CEO calls “FUD” amid BTC withdrawal suspensions

Bitcoin is under pressure at the start of the week, but not for the usual reasons.

As BTC/USD dips to $28,000, observers are closely following events on-chain and at largest global exchange, Binance.

The latter has halted BTC withdrawals three times since the weekend, citing “congestion” on the Bitcoin network, while simultaneously moving a giant chunk of funds between wallets.

We’re aware that some data are showing a large volume of outflows from #Binance.

This ‘outflow’ are actually movements between Binance hot and cold wallets due to the BTC address adjustments.

— Binance (@binance) May 8, 2023

Binance’s moves came as large numbers of transactions entered the Bitcoin mempool, pushing already high fees even further into territory not seen in several years.

That had the unintended result of creating Bitcoin’s first-ever block in which miners earned more from fees than the block subsidy itself — 6.75 BTC versus 6.25 BTC, respectively.

Attention focused on Ordinals and even crypto investment giant, Digital Currency Group, as the source of the transactions. Later, market participants including researcher and investor Eric Wall revealed a potential source of the on-chain “spamming.”

tl;dr: a hex derivative (xen) that’s notable for spamming EVM chains has pivoted to spamming bitcoin via the ordinals brc-20 protocol causing an otherside-like mint event pic.twitter.com/3u2KHNpEyu

— Eric Wall ‍♂️ Taproot Wizard #2 (@ercwl) May 7, 2023

Binance, meanwhile, came in for criticism from some of the industry’s best-known names over its policy.

“Bitcoin is not experiencing congestion. It’s experiencing high demand,” core developer Peter Todd argued.

“binance can just allow users to specify what fee their willing to pay for withdraw, and pay that fee. It costs ~$5 to get an output in the next block. nbd Good chance @binance has a fractional reserve.”

Binance CEO, Changpeng Zhao, also known as “CZ,” indirectly referred to “BTC withdrawal issues” at the exchange, labeling them “FUD.”

“Bitcoin network fees are fluctuating, 18x in a month,” part of a Twitter post stated.

As the events unfolded, BTC price action felt the strain, with a short-timeframe downtrend continuing at the time of writing.

Analyzing trader behavior, monitoring resource Skew noted bid activity increasing on Binance as Bitcoin returned to the $28,000 mark.

$BTC Binance Spot
Update: spot buyers around $28K & likely to sell around $28.5K – $28.7K

Still decent bid depth here https://t.co/F1I9UhJETx pic.twitter.com/DSRTwfb5kK

— Skew Δ (@52kskew) May 8, 2023

Traders eye key levels as BTC price hits 2-week lows

Beyond the immediate events surrounding Binance and fees, market participants continue to eye important levels for BTC/USD.

As the pair trends below $28,000, popular trader Captain Faibik is eyeing $27,300 as a line in the sand.

$BTC Ascending Broadening Wedge Sill in Play..!!

If Bulls can Successfully defend the 27.3k Support, it’s likely that we’ll see a Significant Bounce Back in the Coming days.#Crypto #Bitcoin #BTC #BTCUSDT pic.twitter.com/pwERANhUGE

— Captain Faibik (@CryptoFaibik) May 8, 2023

A further tweet on the day highlighted a tightening wedge structure in place for Bitcoin, with the logical outcome in the form of a breakout now due.

Fellow trader Andrew meanwhile bet on the 50-day exponential moving average (EMA) as a potential support zone, this currently residing near $27,950 and already violated on shorter timeframes.

The day’s current low of $27,617 meanwhile marked Bitcoin’s deepest dip since April 26, per data from Cointelegraph Markets Pro and TradingView.

“BTC is retesting at .618 after the Binance FUD. This is another Bitcoin vs $BTC moment,” crypto educator Crypto Busy summarized, referring to Fibonacci retracement…