The Bitcoin price was pushing its way above the $30,000 mark before recently staging a retreat to the $27,000 mark. Network congestion could be a reason for its recent slide.
Binance, a major cryptocurrency exchange, halted withdrawals due to “heavy volumes and rising processing fees,” per a Reuters report. Nonetheless, some market experts see this as a minor speed bump given bitcoin’s overall bullishness this year.
“Reports of a large bitcoin outflow and withdrawals being paused at a major exchange could be factoring into some of the weakness we’re seeing. Ultimately however, there haven’t been any major developments as far as price action goes, with bitcoin still very much confined to a multiday bullish consolidation,” said Joel Kruger, market strategist at LMAX Group, via a CNBC report.
Despite the recent dip, bitcoin has been relatively less volatile, especially after last year’s bearishness. As such, market experts don’t see a cause for concern, unless price action to the downside dictates otherwise.
“Only a break back below $25,000 would give reason for concern. Until then, we suspect dips will continue to be very well supported,” he added.
Another possible reason for a heavy spike in volume that’s contributing to the network congestion and fees is the use of BRC-20 tokens. The tokens allow for the creation of non-fungible tokens (NFTs) on the bitcoin network, which in the long run looks promising but is causing short-term headaches, like the recent network traffic.
“There is an increasing demand for BRC-20 tokens which include transferring digital collectibles on Bitcoin network,” said Oppenheimer analyst Owen Lau. “The Bitcoin network has gradually supported more different types of tokens like NFTs. This adoption should be a positive sign longer term but it looks like it has slowed down the network.”
Take Advantage of Price Dip
Bitcoin’s recent drop in price could open opportunities for investors to come in and buy the dip. The leading cryptocurrency is still up 65% for the year, and should bullishness continue, the recent dip offers a prime point of entry.
Additionally, a price rally in bitcoin could offer investors opportunity in exchange traded funds (ETFs). Among the ones to consider are the ProShares Bitcoin Strategy ETF (BITO), the Valkyrie Bitcoin Strategy ETF (BTF), the VanEck Bitcoin Strategy ETF (XBTF), and the Simplify Bitcoin Strategy PLUS Income ETF (MAXI).
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