Good morning. Here’s what happens:
Prices: Bitcoin and Ether prices are down due to BRC-20 meme coin congestion, with a potential solution being a shift of profits to altcoins and Ethereum.
Insight: Bitcoin’s path “is not straight,” Paul Eisma, head of trading for XBTO Group, told CoinDesk TV.
Bitcoin buckles under pressure of network chaos
Bitcoin begins the trading day in East Asia down 2.6% to $27,715, while Ether is down 1.4% to $1[ads1],850.
“What’s happening right now in bitcoin is, is pretty unprecedented. And we haven’t really seen this in many, many years,” 21Co founder and CEO Hany Rashwan said during a recent appearance on CoinDesk TV.
Like others, Rashwan blamed BRC-20 meme coins, but also said we shouldn’t mix these with altcoins.
“I wouldn’t categorize meme coins in the same league as altcoins like Ethereum or Solana,” he said. “These altcoins are essentially smart contract platforms that facilitate a variety of functions, including but not limited to meme coins and NFTs.”
Rashwan sees a way out of the congestion that involves meme coin holders taking profits and moving to altcoins and Ethereum, which in turn could cause those coins to increase in value as well.
But it will take another major macroeconomic event to initiate this move. And for now we are stuck with Bitcoin NFTs by PEPE.
Bitcoin’s not-so-straight path
The meme pool congestion on Binance and bitcoin’s sharp decline are “growing pains,” but the largest cryptocurrency by market capitalization “will be good in the long run,” Paul Eisma, head of trading for XBTO Group, told CoinDesk’s “All About.” Bitcoin” program on Monday.
“It’s almost like a deer in the headlights for the bitcoin protocol,” Eisma said, linking the latest technical issues to the late 2021 Taproot upgrade, which increased the bitcoin network’s privacy, among other improvements.
But Eisma optimistically said that bitcoin has remained in a range between $25,000 and $30,000 for much of this year. He said crypto is still in its formative years, so understandably subject to the same headwinds that have hit other early technologies throughout history.
“Like any young and growing, nascent technology that gets upgrades and modifications, this is part of it,” Eisma said. “This is part of the growth and development of the network and the path is not straight.
Eisma said he will watch Wednesday’s May consumer price index release for a sense of the U.S. central bank’s next privacy move. The Federal Reserve has raised interest rates by 25 basis points (bps) three times in a row, but observers of monetary policy, especially those critical of the Fed, are hoping for an end to the bank’s hawkishness.
“What the asset markets are looking for is something that’s not too strong or too weak, because if something comes in and around, like, I don’t know, plus or minus, you know, a decent, low standard deviation of what’s expected, then ( it is) still too early for a pause to consider reductions, he said. But he cautiously added that the current rate of inflation is still above “the 2% level that the Fed is looking for. It’s still about the core PCE level that they’re also looking for. So, you know, Powell has been clear that he’s going to hold rates at this level longer than the market suggests.”
Binance has once again resumed bitcoin (BTC) withdrawals after another hiatus, as the Bitcoin network suffered unprecedented congestion. This came as Pepecoin (PEPE) holders can take profits on their positions following one of the most spectacular rises in the history of alternative currencies (altcoins). 21.co co-founder and CEO Hany Rashwan shared his crypto market analysis. Revolut Brasil CEO Glauber Mota and Delta Blockchain Fund founder and GP Kavita Gupta also joined the conversation.