Binance, the largest cryptocurrency exchange platform, halted Bitcoin withdrawals on its site over the weekend. The aforementioned action has prevented the largest coin by market cap from exiting the top trading venue.
The crypto exchange platform continued by saying that the network congestion that led to their decision to temporarily halt Bitcoin withdrawals was a major factor in that decision. Additionally, Binance has announced that it is “working on a fix” to resume withdrawals “as soon as possible.”
Furthermore, Binance had twice last weekend halted Bitcoin withdrawals. The first temporary delay occurred on Sunday afternoon, U.S. time, for almost two hours as a result of a record-high number of unconfirmed transactions. The second one, which lasted two hours, happened on Sunday night. As of the time of writing, Binance has already started Bitcoin withdrawals following a second halt due to the unheard-of congestion on the Bitcoin network.
Allegations on the Pause’s Root Cause
Several claims regarding the cause of the withdrawal outage have been made and are circulating on Crypto Twitter. Large-scale Twitter Spaces discussions ranged from regionally specific technical hypotheses to global political conspiracies.
A little over an hour later, Binance announced the return of Bitcoin withdrawals. According to CoinGecko, Bitcoin was marginally up at the time of writing, up to less than 1% to about $29,000. On the other hand, OKX, a different cryptocurrency exchange site, asserted that despite high transaction costs, Bitcoin deposit and withdrawal services remained operational.
Congested Network Leads to Higher Transaction Fees
Previously, transactions would be broadcast on the network’s mempool where they would wait to be chosen by miners and put to the following block, but now they are added to the blockchain instead. There is currently a significant backlog of Bitcoin transactions, which is thought to be increasing transaction fees.
Yesterday afternoon, there were over 395,000 unconfirmed Bitcoin transactions in the network’s mempool. According to Blockchain.com, the aforementioned number was merely 56,500 on April 26 of last year. It’s also important to remember that Bitcoin transaction costs were astronomically high. Whereas data from YCharts showed that on Friday, Bitcoin transaction costs averaged $9.62, which was the highest amount in almost two years.
According to reports, transaction costs last weekend were on average $8.84. These studies provide compelling evidence that they were returning to a downward trend. However, compared to six months prior, when the average price of a Bitcoin transaction was $1.45, it still represented a gain of nearly 500%.
It is clear that the current spike in traffic congestion and rising transaction costs corresponds with a sharp increase in the number of inscriptions submitted via Ordinals. This might be a result of users using the Bitcoin protocol for minting NFT-like assets to produce and exchange fungible, BRC-20 tokens.