Binance Halted Withdrawals in Mid-May; BTC Temporarily Fell

Bitcoin endured a bit of a dip in mid-May when it was announced that Binance would briefly halt all withdrawals and deposits due to ongoing congestion and traffic.

Binance Came to a Standstill (so Did BTC)

Bitcoin had been trading in the $29,000 range prior, and there were many analysts out there who felt the world’s number one digital currency by market cap was on the verge of striking $30K again like it did in April. Sadly, it appears Binance got in the way of this and set BTC back a few steps.

While the halts were temporary and lasted only a short while, the damage was done to BTC, which had to fall back a few steps before it could proceed with its prior trek up the financial staircase. Binance issued the following tweet after the halts came to an end:

To prevent a similar recurrence in the future, our fees have been adjusted. We will continue to monitor on-chain activity and adjust accordingly if needed. Our team has also been working on enabling BTC Lightning Network withdrawals, which will help in such situations.

Joel Kruger – market strategist at LMAX Group – stated in an interview:

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 multi-day bullish consolidation. Only a break back below $25,000 would give reason for concern. Until then, we suspect dips will continue to be very well supported.

The news is unusual for a few reasons, a big one being Binance is the world’s largest and most popular digital trading platform. In terms of daily volume, no exchange can say it attracts the attention or activity Binance does. Given its size and prowess, you’d think such a firm would be ready for loads of traffic, though temporary halts and shutdowns of this nature are common for Binance.

Such an occurrence also took place in late March, though that time around, the problems were attributed – according to Ilya Volkov, CEO of You Hodler – to a technical glitch in the company’s network rather than heavy traffic. Volkov mentioned in a statement:

These kinds of bugs could happen everywhere, and crypto exchanges are not unique.

Trying to Keep Up

Oppenheimer analyst Owen Lau was also quick to throw his two cents in regarding the present issues. He stated:

There is an increasing demand for BRC-20 tokens, which include transferring digital collectibles on [the] bitcoin network. The bitcoin network has gradually supported more different types of tokens like NFTs. This adoption should be a positive sign in the longer term, but it looks like it has slowed down the network.

Tags: Binance, bitcoin price, Withdrawals