The bitcoin mempool starts to drop

in #crypto4 months ago

The mempool is the pool of unconfirmed transactions waiting for a miner to include them in a block.

On May 7th, the mempool surged to over 350,000 unconfirmed transactions, with people waiting several days for their transactions to confirm. This led Binance to pause bitcoin withdrawals (they told users to buy other cryptos and withdraw that instead).

Binance got a lot of criticism for their decision, with the bitcoin price dropping below $27,000, with some panicky people wondering if Binance was in trouble.

In reality, the Binance pause enabled the mempool to clear, as Binance is a major source of bitcoin transactions.

Here is what the mempool looks like now:


It's down to 240,851 unconfirmed transactions - still way more than in April, but down a third from the May 7th peak.

Huge mempools are usually negative for bitcoin. Old hands remember the mempool crisis of 2018, when it was taking up to a month for transactions to confirm and fees spiked to over $1,000. That episode killed the use of bitcoin to buy stuff from retailers - Overstock, Steam and other online retailers removed the ability to pay with bitcoin, as money that doesn't reach them for a month breaks their business model.

Bitcoin entered a bear market as a result. The bitcoin price eventually recovered, but it became a commodity, it ceased to be a way to pay for goods.