The price of Bitcoin fell sharply after Binance, one of the biggest crypto exchanges in the world, experienced congestion on the Bitcoin network that temporarily led to withdrawals being halted.
Bitcoin fell by about 4% to $27,787.05 in Monday’s trading. This came after the coin had fallen by more than 5% over the weekend.
Although the pause in withdrawals sent flutters through the market, analysts say that only a major break back below $25,000 would be concerning.
Binance had tweeted over the weekend that the Bitcoin network was “experiencing a congestion issue” and that Bitcoin withdrawals would be temporarily halted until the network stabilized.
Viewed skeptically, some market participants could have started whispers that a more serious problem was brewing. However, informed industry voices were quick to remind everyone that the Bitcoin network has had a well-known scale problem for a long time.
The Bitcoin network was not designed to handle many transactions at once. It typically processes just seven to 10 transactions per second, meaning it will be a long time before it will be a serious rival to mainstream companies like Visa and Mastercard.
What does this mean for me?
As a result of the Bitcoin network’s lack of speed at scale, projects like the Lightning Network, which helps speed up transactions without affecting the network, have gained in popularity.
Analysts have been quick to point out that the whole affair has been a storm in a teacup and that there is nothing deeper at play relating to the viability of the world’s biggest cryptocurrency.