- Bitcoin miners have emerged as the largest beneficiary of the network congestion that occurred in the past two days.
- The rise of meme coins has significantly reduced cash flow to the Bitcoin market.
The Bitcoin market has been on a rollercoaster in the past few weeks after experiencing a significant high resistance of around $31k. Trading around $27.5k, Bitcoin price has dropped more than 5 percent in the past two days.
On-chain aggregate data shows that more than 150k Bitcoins were added on the largest centralized exchange by daily traded volume, Binance, in the past 24 hours. Typically, an increase in Bitcoin balance on centralized exchanges is a characteristic of impending sell pressure.
Moreover, Bitcoin price has formed a bearish divergence on the daily Relative Strength Indicator (RSI) in combination with a possible head-shoulder (H&S) candlestick pattern. From a technical standpoint, if the Bitcoin bulls are not able to hold above $27k, then $25k is imminent in the coming weeks.
Furthermore, the rise of new meme coins – including $BEN, $PEPE, and $POOH among others – has significantly increased cash flow from Bitcoin to low-cap altcoins. Historically, the rise of meme coins has signified the end of a rally era.
Closer Look at Bitcoin Network
Over the past weekend, the Bitcoin ecosystem was hit with one of its worst network congestion, leading to a huge spike in transaction fees. Nevertheless, a study by the on-chain analysis platform Glassnode reveals a decline in new Bitcoin addresses in the past year.
Addresses on #Bitcoin have taken an extreme dive; new and active addresses are approaching the 365-DMA.
New addresses are at YTD lows, while active addresses are at 1-year lows.
Despite record transaction levels. pic.twitter.com/ZICWoDMGPJ— James Van Straten (@jvs_btc) May 8, 2023
In his report, Binance CEO Changpeng Zhao noted that the Bitcoin network recorded fluctuating fees in the recent past, spiking almost 18X from a month ago. Nevertheless, CZ noted that an increase in gas fees is a characteristic of an incoming bull market, and investors should not complain since it is still cheaper than cash.
Meanwhile, the Bitcoin miners had one of their most profitable business days following a spike in transaction fees. Currently, the Bitcoin network has a total hashrate of 345.78 EH/s and a mining difficulty of about 48.01 (T).
Price Action
The Bitcoin and crypto traders are closely monitoring tomorrow’s Consumer Price Index (CPI) data from the United States Bureau of Labor Statistics. Notably, the CPI accounts for the majority of inflation, which is crucial data for the cryptocurrency market. In this regard, respected crypto trader Michael van de Poppe, with more than 656k Twitter followers, noted that the Bitcoin bulls will have to work on $27.8k to rejuvenate the bullish sentiment.
#Bitcoin still trending downwards, as $27,800 now becomes resistance.
I'm expecting a sweep lower again, and then we're ready to long your longs in anticipation of CPI.
Need a bullish divergence as well, but we're getting there. pic.twitter.com/eUkq9XLlxx
— Michaël van de Poppe (@CryptoMichNL) May 9, 2023
After hitting the 2022 bear market bottom around $15.6k, crypto analysts expect the Bitcoin market to consolidate horizontally in the coming quarters. Nevertheless, the attention on Bitcoin’s dominance, which is sitting at a crucial resistance level, could soon shift to the altcoin market due to the growth of meme coins.
If Bitcoin price breaks above $31k, the altcoin market is expected to bleed further in the coming weeks, and vice versa if Bitcoin drops below $25k.
