Bitcoin slipped below US$28,000 on Tuesday morning in Asia as the rise of the Ordinal protocol and Bitcoin-based memecoins drove up transaction fees and caused network congestion. Ether and all other top 10 non-stablecoin cryptocurrencies also fell back, with Litecoin leading the losers. U.S. equity futures traded flat to lower after Wall Street closed mixed on Monday ahead of the latest inflation reading for the economy on Wednesday.

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Top 10 crypto lose steam

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Image: Envato Elements

Bitcoin dropped 3.48% to US$27,594 in the 24 hours to 09:00 a.m. in Hong Kong, according to CoinMarketCap data. The token has fallen 1.76% over the past seven days. 

Binance, the world’s largest crypto exchange, halted Bitcoin withdrawals twice within 12 hours on Sunday and Monday, citing congestion and higher transaction fees. The average transaction fee on the Bitcoin blockchain surged to US$19.21 on Sunday, almost seven times higher than the start of the month, according to data from financial information platform YCharts.

The jump in transactions is attributed to the Ordinal protocol introduced in January that allows users to mint memecoins and digital collectibles on the Bitcoin blockchain.

Ether fell 2.04% to US$1,843 but held a weekly gain of 0.50%. The second largest cryptocurrency reached a low of US$1,818 earlier on Tuesday, but managed to hold the US$1,800 resistance level.

All other top 10 non-stablecoin cryptocurrencies traded lower for the past 24 hours, with Litecoin leading the losers, which fell 8.08% to US$77.65 and logged a weekly loss of 10.59%.

Pepe and Floki, two memecoins that surged after being listed on Binance last week, slid 32.88% and 12.36% in the past 24 hours.

Adding to the pessimism, Seattle-based crypto exchange Bittrex Inc. filed for Chapter 11 bankruptcy on Monday. The company closed the U.S. business on April 30 and faces charges by the Securities and Exchange Commission for alleged securities law violations. The company has rejected the charges. Bittrex Global will continue to service customers outside the U.S., the company said on Tuesday.

The total crypto market capitalization dropped 3.26% in the past 24 hours to US$1.14 trillion. The total trading volume jumped 56.84% to US$45.38 billion.

NFT trades fall amid memecoin hype

The indexes are proxy measures of the performance of the global NFT market. They are managed by CryptoSlam, a sister company of Forkast.News under the Forkast.Labs umbrella.

In the non-fungible token (NFT) market, the Forkast 500 NFT index fell 2.11% to 3,371.82 in the 24 hours to 09:00 a.m. in Hong Kong, losing 7.27% for the week.

DeGods, previously the largest Solana-based NFT collection by all-time sales that migrated to the Ethereum blockchain in April 2023, saw its sales in the past 24 hours surge over 400% to US$1.19 million, surpassing that of Azuki and Bored Ape Yacht Club.

Sales on the Ethereum blockchain dipped 3.75% to US$15.42 million, with the average transaction fee on the Ethereum blockchain reaching US$21.40 on May 8, the highest in 11 months, according to data from blockchain intelligence platform BitInfoCharts.

“Ethereum network is heavily congested. Gas fees are through the roof due to the memecoin season,” said Brian Boisjoli, Product Manager at Forkast Labs, who noted that with almost 200,000 pending ethereum transactions, it would take around 4 hours to complete a transaction on the network.

U.S. equity futures flat before CPI

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U.S. stock futures edged lower as of 9:00 a.m. in Hong Kong. The Dow Jones Industrial Average futures lost 0.09%. The S&P 500 futures dipped 0.10%. And the Nasdaq Composite futures dipped 0.17%. 

The Federal Reserve highlighted turmoil in the banking system as a threat to the economy in its financial stability report on Monday, saying “concerns about the economic outlook, credit quality, and funding liquidity could lead banks and other financial institutions to further contract the supply of credit to the economy.”

The U.S. April consumer price index report is released Wednesday, with economists expecting the inflation rate to rise 5% on year and 0.4% by month, according to CNBC on Monday citing projections by Dow Jones.

The Fed next meets on June 14 to decide on interest rates. The CME FedWatch Tool predicts an 85.7% chance the Fed will keep rates unchanged at 5% to 5.25%, while it gives a 14.3% chance for another 25 basis-point rate hike, up from 9.6% on Monday.

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