- Transactions on exchanges stopped, causing FUD among the crypto community.
- BTC prices are adversely affected, traders turned bearish.
The overall support for Bitcoin [BTC] has been on the rise for quite some time. Since the price of Bitcoin has risen in recent months, sentiment around the King Coin has been mostly positive.
Read Bitcoin [BTC] Price forecast 2023-2024
However, lately there has been an increase in FUD around Bitcoin. Initially, the FUD started due to large transactions BTC made by Binance. There was a outflow of 117,359 BTC and the inflow of 10,036 BTC. After these transactions, there was an additional outflow of 40,184 BTC.
These transactions led many speculators to believe that Binance could sell their BTC holdings. Even though these transactions could be attributed to internal adjustments of Binance’s cold wallet. Many members of the crypto community expressed this reasoning in favor of internal adjustments.
According to further on-chain inspection, it is likely that the Binance cold wallet was internally changed to a new address and that the new address was not transferred after receiving funds.
— Wu Blockchain (@WuBlockchain) May 7, 2023
Usually this would be enough to calm the uncertainty.
The plot thickens
However, things took a turn for the worse when Bitcoin transactions on the Binance exchange stopped working. Notably, temporary withdrawals of BTC were halted on the Binance exchange. According to their official Twitter account, the withdrawals have been canceled due to the large number of pending transactions.
We are temporarily closed #BTC withdrawals due to the large number of pending transactions.
Our team is currently working on a fix and will reopen $BTC recordings as soon as possible.
Rest assured, funds are SAFU.
— Binance (@binance) May 8, 2023
Another reason cited by the Binance team was the sudden increase in BTC fees that the exchange had not anticipated. There have been several speculations as to why there has been a spike in fees on Bitcoin. Many have speculated that Bitcoin may have fallen victim to a DDOS attack.
For Context, a DDOS attack occurs when an attacker floods the network with a large amount of requests or traffic, overwhelming the network’s capacity and making it difficult for transactions to get through.
🚨🚨 BITCOIN UNDER ATTACK🚨🚨
A coordinated DDOS attack has pushed bitcoin fees to $8 per transaction, making it impossible for most sat stackers to use the network https://t.co/h5dZi8nk8Z
— davis 🐺🦊 (@basedkarbon) May 7, 2023
At the time of writing, Binance reported that there were withdrawals live on his exchange.
Interestingly, another exchange was also impacted by the increase in fees, namely Robinhood. According to new data, delays have been noted process transactions also for Bitcoin on the Robinhood exchange.
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How was BTC affected
Due to the high FUD caused by these events, Bitcoin’s price is down 3.89% in the past 24 hours, according to CoinMarketCap. However, despite the price drop, holders continued to support BTC and hold onto their holdings.
Source: Sentiment
Traders showed less optimism compared to holders, as evidenced by a substantial drop in the long-to-short ratio visible on the charts. This suggests that the number of short positions against BTC outweighed the long positions in favor of Bitcoin.
Source: Coinglass