The world’s largest crypto exchange Binance halted withdrawals on Sunday morning following significant congestion on the Bitcoin network.
In a Twitter update on May 7, Binance announced a temporary closure of BTC withdrawals, saying the team was working on a fix until the network stabilizes. Around 90 minutes later, Binance said that the withdrawal facility had been restored.
Thank you for your patience and we apologize for any inconvenience.
— Binance (@binance) May 7, 2023
The crypto exchange recorded over $180 million worth of inflows over the day, according to data from CryptoQuant.
The extent of Bitcoin’s network congestion can be seen from the mempool, which lists the number of pending transactions waiting for validation from a node before being included in a blockchain. On-chain data shows around 488,000 unconfirmed Bitcoin transactions at the time of writing, which is far higher than the levels seen during the 2018 and 2021 cryptocurrency bull markets.
The network congestion also pushed up the average transaction fee on the network, which currently stands 300% higher than what it was a year prior.
The percentage of Bitcoin Miner's revenue derived from transaction fees is now on par with levels reached during the raging 2021 bull market
Absolutely wild pic.twitter.com/A7kZbMzENx
— Will Clemente (@WClementeIII) May 7, 2023
“Bitcoin was working just fine. Binance either didn’t want to pay up with higher fees or didn’t want more bitcoin leaving the exchange, so they decided to cut off withdrawals for its users and blame it on Bitcoin,” said Swan Bitcoin analyst Sam Callahan on Twitter.
Several industry watchers have attributed the rise in transaction fee, driven by higher levels of network activity, to the emergence of BRC-20 transactions. This new “experimental” token standard was created on the Bitcoin Ordinals protocol and now accounts for more than half the transactions on the Bitcoin network.
BRC-20 now has a market cap of over $535 million across 14,000 tokens, mostly dominated by meme coins, including PEPE and MEME.