Binance is considering using the Lightning Network to tackle network congestion.
The exchange first announced its temporary pause of Bitcoin withdrawals last weekend, citing the massive amount of transactions in handling leading to network congestion.
The problem resurfaced on May 8, forcing another halt to deal with the issue.
Lightning Network is a Long-term Solution
The overwhelming network congestion prompted the exchange to seek an effective scaling solution. And Lightning Network could be the answer. Binance announced today that it would consider adding Lightning support for deposits and withdrawals.
Lightning is a layer2 off-chain network running atop the Bitcoin blockchain. The network can instantly handle millions of transactions at faster speed with cheaper costs. That said, Bitcoin Lightning Network is the most popular Bitcoin Layer2 solution.
A number of major crypto exchanges have embraced the protocol, including Kraken, Bitfinex, BitStamp, and OKEx. Coinbase’s CEO Brian Armstrong said earlier in April that the exchange planned to integrate Lightening Network into its platform.
In the past 48 hours, the trading volume on Binance, one of the world’s largest cryptocurrency exchanges, has surpassed $6 billion, according to data from CoinGecko.
The amount is five times more than the trading volume of the second-ranking exchange, OKX, representing a significant increase in volume indicates a growing demand for cryptocurrencies, despite the recent market fluctuations.
However, Binance faced a technical issue on May 7, when the exchange announced a suspension of bitcoin withdrawals for a period of 90 minutes due to network congestion.
The cryptocurrency exchange has now confirmed that the bitcoin withdrawal service has been resumed, following a brief halt in operations. The company’s technical team worked urgently to resolve the issue and reopen the service.
Binance Under Strain
This is not the first time that Binance has faced technical problems. In March, the world’s largest digital currency exchange had to suspend deposits and withdrawals on its platform due to technical issues affecting transactions.
Lightning Network has been hailed for its potential to significantly enhance the scalability of Bitcoin and other cryptocurrencies.
Experts believe that this technology has the capacity to process at least one million transactions per second, which would be an all-time high.
The scalability breakthrough would make it possible for users to carry out frequent microtransactions with ease, enabling more seamless everyday use of these digital assets.
Sell In May?
Investors have been drawn to the recent hype surrounding memecoins, leading some to believe that the altcoin season has arrived.
However, it appears that the “Sell in May” effect has taken hold, potentially dampening the enthusiasm for cryptocurrencies. May is traditionally not a good time for the market – last year in May, TerraUST’s collapse ignited a big crash across cryptocurrencies.
Following the incidents, Binance Coin (BNB) experienced a sharp decline, dropping by 3% in the last 24 hours. The crypto market is currently in a downward trend with Bitcoin and altcoins all dropping in price.
Bitcoin, in particular, is currently trading at $27,600, representing a decline of 2.25% in the last 24 hours.
The past week has been eventful for the altcoin market, with two coins, $SUI and $PEPE, making headlines. However, the news has not been positive for these coins, as both experienced a dip in value.
According to CoinMarketCap data, $SUI dropped by 4%, while $PEPE saw a significant decline of 25%.
Looking ahead, there are some key economic data releases that could potentially impact the crypto market.
On Wednesday, the CPI data will be released, which could provide insight into inflation rates. This will be followed by the PPI inflation data and jobless claims data on Thursday, which could also have an impact on the market.
The overall outlook for the crypto market is currently bearish, with inflation rates far beyond the target and interest rate hikes looming.
Additionally, the recent bank turmoil has contributed to the negative sentiment in the market. As a result, investors may be more cautious in their approach to investing in cryptocurrencies, which could contribute to continued downward pressure on prices.