The price of Bitcoin (BTC) is moving towards a strong month-end, after having gained around 25% in October
Buyers managed to mark the main short-term resistance near $13,900.
Any retreat to $12,500 is likely to be seen as an opportunity to get on the long side
The price of Bitcoin (BTC) is battling for the largest amount of monthly profits since April. The price action is trading about 3% higher this week, after the main short-term resistance was marked near $13,900.
Fundamental analysis: High transaction fees
Bitcoin transaction fees climb to a 28-month high as the block chain sees the worst traffic jam since 2018. The average Bitcoin transaction cost since Wednesday was 0.00086764 BTC or $11.66, the highest in more than two years.
Over the last 12 days, average Bitcoin charges increased 573% along with the price increase from $11,200 to $13,800.
“Bitcoin mempool has come back into focus as transaction volumes have increased, resulting in network congestion and consequently higher fees,” said Denis Vinokourov, Research Manager at prime broker Bequan.
Mempool refers to the bundle of unconfirmed transactions, and when a BTC transaction is executed, its first destination is Mempool, where the transactions wait for the miners’ approval. Bitcoin is able to process transactions worth only 1 megabyte (MB) per block, which is mined approximately every 10 minutes.
As traffic increases, there are delays and transaction backlogs in the block chain, and in cases where demand is higher than supply, miners increase their revenues by focusing on transactions with high fees. As a result, users offer higher fees to skip long queues.
Strong price increases are usually followed by high network congestion, and since the Bitcoin price has risen significantly in the last 12 days, network congestion has also increased by 1,800% during this period.
On Tuesday, the Mempool with a total block size of 66.8 MB. According to the data source blockchain.com this is the highest level since the bull market of December 2018.
As of October 29, there were 121,340 unconfirmed transactions in Bitcoin’s Mempool with a total block size of 66.8 MB. According to the crypto data provider blockchain.com, this is the highest level since the wild bull market rally of December 2018.
Technical analysis: Profit-taking facilitates a downward correction
The downwardly revised Bitcoin (BTC) price is trading about 3% higher in the week after profit taking pushed the price below $13,500. The bulls reached their short-term target at $13,900, which allowed early BTC buyers to abandon their winning positions.
The price action could continue to correct itself from these levels into November. In this case, investors looking to enter the long side should wait for the price action to approach the $12,500 range before committing to a trade.
Any movement below $12,000 will invalidate this trading order, while the first upside target in this scenario is $14,150.
The price of Bitcoin (BTC) is moving towards a strong month-end close as transaction fees have reached their highest level in 28 months as the network struggles with the worst congestion in over 2 years.