- Transactions on exchanges halted, causing FUD amongst the crypto community.
- BTC prices get negatively impacted, traders turned bearish.
The overall support for Bitcoin [BTC] has been on the rise for quite some time. Ever since Bitcoin’s price rallied over the last few months, the sentiment around the king coin has mostly been positive.
Read Bitcoin’s [BTC] Price Prediction 2023-2024
However, recently there has been an increase in the FUD surrounding Bitcoin. Initially, the FUD began due to large transactions BTC being made by Binance. There was an outflow of 117,359 BTC, and the inflow of 10,036 BTC. Following these transactions, there was an additional outflow of 40,184 BTC.
These transactions led many speculators to believe that Binance may be selling their BTC holdings. Even though these transactions could be attributed to internal adjustments of Binance’s cold wallet. A lot of members of the crypto community expressed this line of reasoning for internal adjustments.
According to further on-chain inspection, it is likely that the Binance cold wallet was internally adjusted to a new address, and the new address did not transfer out after receiving funds.
— Wu Blockchain (@WuBlockchain) May 7, 2023
Usually, this would be enough to calm the uncertainty down.
The plot thickens
However, things took a turn for the worse when Bitcoin transactions on the Binance exchange stopped working. Specifically, temporary withdrawals of BTC were shut down on the Binance exchange. According to their official Twitter handle, the withdrawals were canceled due to the large volume of pending transactions.
We’ve temporarily closed #BTC withdrawals due to the large volume of pending transactions.
Our team is currently working on a fix and will reopen $BTC withdrawals as soon as possible.
Rest assured, funds are SAFU.
— Binance (@binance) May 8, 2023
Another reason cited by the Binance team was the sudden surge of BTC fees that the exchange did not anticipate. There have been various speculations about 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 volume 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 sent bitcoin fees soaring to $8 per transaction making it impossible for most sat stackers to afford to use the network https://t.co/h5dZi8nk8Z
— davis
(@basedkarbon) May 7, 2023
At press time, Binance reported that withdrawals were live on its exchange.
Interestingly, another exchange was also impacted by the surge in fees, which was Robinhood. According to new data, it was observed that there have been delays in processing transactions for Bitcoin on the Robinhood exchange as well.
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How was BTC affected
Due to the high FUD caused by these events, the price of Bitcoin has fallen by 3.89% in the last 24 hours, according to CoinMarketCap. However, despite the decline in prices, holders continued to support BTC and held on to their holdings.
Source: Santiment
Traders exhibited less optimism compared to holders, as indicated by a substantial decline in the long-to-short ratio visible on the charts. This suggests that the number of short positions taken against BTC exceeded the long positions in favor of Bitcoin.
Source: Coinglass
