Bitcoin Bearish Warning as Meme Coin Activity Surges

Bitcoin has slipped lower with a recent surge in meme coin activity, bringing bearish warnings.

BTC – Daily Chart

BTC – Daily Chart

The price of Bitcoin has slipped below the $28,000 level and now trades at $27,500. A break of the $27,000 level could see Bitcoin head toward the $20,000 support level again. 

Coindesk cited data from Dune analytics that showed peaks in Bitcoin’s price with high transactions in meme coins- crypto tokens that surge on speculative activity and social media buzz. Dune Analytics said last week’s $2.3 billion meme coin trading volume could mark a top. 

One big surge in meme buying was in May 2021, just before Bitcoin dropped from $60,000 to $30,000. The latest coin surging was a PEPE coin, based on a carton frog, which vaulted to a peak of a $1.85 billion market cap before slumping after its Bitcoin listing. Another headwind was a second pause of withdrawals from the Binance exchange in 24 hours, with investors worried about problems. 

Late on Sunday and early Monday, the world’s largest crypto exchange halted bitcoin withdrawals saying that it had a glut of pending transactions because it hadn’t offered bitcoin miners a high enough reward for executing the trades. 

Yet another problem for BTC has been a surge in network congestion which has pushed costs for executing those transactions on the network to $20 from only $1.20 a week ago. A project called Ordinals created the ability to add NFT-style media to the network, which is now experiencing a rise in activity. Ominously, that is also the highest transaction price since the same May 2021 period before a sharp correction.

Bitcoin Price Prediction

Bitcoin has been on a strong surge in 2023, driven mainly by speculative activity. However, the coin ran out of buyers around the $30,000 level. There is now a risk of a pullback to $20,000. The cryptocurrency market has been under strict regulatory scrutiny. It is now at risk from the arrival of a central bank digital currency (CBDC).

“If CBDCs are designed prudently, they can offer more resilience, safety, greater availability, and lower costs than private forms of digital money,” the head of IMF said.

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