Bitcoin (BTC) continues to flirt with valuations not seen in nearly two months, as price momentum nosedives.
The asset, which is down 2.5% on the day to $26,300, lost its footing above a support threshold along $27,000 sending it to its lowest point since March 14.
Bitcoin’s return to $25,000 looks like a very “real prospect” in the coming days, FxPro senior market analyst Alex Kuptsikevich told Blockworks in an email.
“The bears will have their work cut out for them here, as some oversold conditions will have built up by then,” he said, highlighting the distorted equilibrium between buyers and sellers.
For a time, volatility was muted as prices remained relatively locked between $27,000 and $30,000. That was expected to persist throughout May, as declining interest across crypto derivatives effectively sapped long and short sellers.
It’s worth noting that as of May 8, bitcoin volatility was hovering at its lowest point since the beginning of January at 29% — down significantly from March 13’s peak of 63%, data from IntoTheBlock shows.
However, volatility has been spiking on the daily time frame since May 8 and that uptick is poised to feed into medium-term price action.
Still, the fact that the price has not yet breached $25,000 is significant when viewing this year’s performance, Kuptsikevich added.
“Now it has every chance of becoming an equally reliable support,” he said.
But first, bitcoin would need to sort out its congestion issues, Rich Rosenblum CEO of market maker GSR told Blockworks.
Data reveals a significant increase in unconfirmed Bitcoin transactions, which currently stand at 284,369. This is a 440% rise compared to the figure of 52,600 observed nearly two months ago on March 17.
The current weight of the mempool, which refers to the total data size within it, is about 871 MB. This exceeds the default maximum mempool limit of 300MB set by Bitcoin Core, data shows.
It’s important to note that not every node operator sticks to the default 300MB limit. Some opt for higher thresholds to prevent discarding transactions with lower fees.
When this occurs, transactions continue to be processed, they just might come with a higher cost, likely the result of a newly popular use case for the world’s oldest crypto.
Over the past week, there has been a substantial increase in the number of Ordinals inscriptions on the Bitcoin network, which has almost doubled from 2.5 million to 4.78 million. This surge is largely attributed to the growing interest in the BRC-20 token.
“Organic congestion due to excitement over BRC-20? Well, that’s probably bullish that we’re finally seeing enough adoption that it’s slowing the network,” Rosenblum said.
If, on the other hand, the network is deliberately flooded with a continuous cycle of small transactions in an attempt to profit from a bitcoin short position. “That’s bearish and hard to police in a decentralized world,” he added.
Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.
