Bitcoin blockchain fees have reached their highest point in two years due to increased demand for block space driven by the rising popularity of the Ordinals protocol and BRC-20 tokens. The average transaction fee on the Bitcoin network was just under $20 during European hours on Monday, a significant increase from last week's average of $1.20. The number of non-fungible tokens tied to the Bitcoin blockchain has surged above 3 million, with inscriptions functioning on the Ordinals Protocol. Despite a drop in prices, BRC-20 tokens on Bitcoin are seeing millions in trading volumes, indicating an increase in Bitcoin velocity. However, network congestion has briefly caused problems at crypto exchanges such as Binance, which paused bitcoin withdrawals twice over the weekend.

There are currently 14,079 different tokens that have been minted using the BRC-20 standard on the Bitcoin blockchain, with a combined market cap approaching $1 billion. The BRC-20 standard is named after Ethereum's ERC-20 and is used to create fungible tokens via the Ordinals protocol without the use of smart contracts. However, BRC-20 tokens require a Bitcoin wallet to mint and trade. The rise of meme coins has contributed to a significant increase in transaction fees for Bitcoin miners.

Bitcoin's network is experiencing a significant spike in activity following the Taproot upgrade, which improved the privacy, scalability, and security of the network and paved the way for the creation of decentralized apps on the Bitcoin blockchain. Glassnode data suggests that more than 75% of Bitcoin on-chain transactions used Taproot on May 7, a record high compared to only 1.536% at the beginning of the year, leading to a surge in network traffic. This has pushed the average fee rate to the highest in nearly two years, while the number of addresses sending BTC to exchanges hit a 2-year low, potentially indicating that investors are willing to hold the asset in anticipation of a new rally. However, the network congestion has also ignited concerns over a potential Denial of Service attack.

Trading volume in meme coins has surged, reminiscent of frenzied activity observed ahead of previous bitcoin market tops. The crypto market saw $2.3 billion in meme coin trading volume last week, a six-fold rise from the preceding week's $387 million, and the highest since May 2021. The speculative mania was led by pepecoin, a frog-themed token that crossed $1 billion in market capitalization on Friday, eventually peaking at $1.82 billion. Historically, speculative mania in non-serious cryptocurrencies has presaged major market tops or bearish reversals in bitcoin, the leading cryptocurrency by market value.

Bitcoin is experiencing downside volatility due to the highest fees in two years and a full mempool, which have caused BTC/USD to break down from $28,000. Binance, the largest exchange, has paused BTC withdrawals several times over network "congestion." The turmoil marks a flustered start to a week already full of potential BTC price volatility catalysts, including macroeconomic data releases, Q1 earnings reports, and the Consumer Price Index. Bitcoin network metrics show that miners are still selling their holdings, leading to analysis that the 2022 bear market is still in play. The network value to transaction ratio has also hit its highest levels in four years.

Bitcoin is facing downside pressure due to high fees and a full mempool, with Binance pausing BTC withdrawals. Miners are still selling their holdings, indicating that the 2022 bear market is still in play. Traders are watching for important levels, with $27,300 seen as a line in the sand and the 50-day EMA as a potential support zone. On the other hand, Bitcoin miners continue to deal with the consequences of the 2022 bear market, with BTC reserves they hold at a two-year low.

Bitcoin and altcoins have seen significant declines over the weekend, with Bitcoin falling below $28,000 for the first time in about a week. Ethereum and other altcoins have also declined by 3-4%, while larger-cap alts like Polygon, Ripple, Shiba Inu, and Avalanche experienced drops of 5% or more. The total crypto market cap has declined to $1.115 trillion, dropping by $40 billion daily and $60 billion in the past two days. The market volatility has been attributed to a range of factors, including regulatory concerns, China's crackdown on crypto mining, and concerns over environmental impact.

Bitcoin transaction fees and unconfirmed transactions have caused concern over a potential Denial of Service (DoS) "attack" on the network. Some analysts have allayed these fears, attributing the congestion to increased demand on the network, which has caused total fees per block to temporarily exceed the block subsidy reward of 6.25 BTC for the first time since 2017. The surge in activity has been attributed to the rise in Ordinals inscriptions. Some on Crypto Twitter speculated that the congestion resulted from a DoS attack on the Bitcoin network, but analysts quickly pointed out that it was due to demand. Binance has suspended Bitcoin transactions citing the large volume of pending transactions.

Bitcoin, the world’s largest cryptocurrency, is experiencing a surge in transaction fees due to the increasing congestion on the network.

Meme coins are shifting to the BRC-20 standard, taking over the Bitcoin network as Ethereum faces congestion from new tokens. Daily minting fees on BRC-20 reached a record high of 247 BTC on May 7, and the total fee for these Bitcoin Ordinals was 641 BTC. BRC-20 tokens have a market cap of $541 million, with 14,079 tokens, many of which are meme coins. The shift to BRC-20 could be due to the congestion of the Ethereum network from popular meme tokens like PEPE. The popularity of Ordinals has also caused Binance to halt BTC withdrawals twice in 12 hours. A new standard called BRC-21 is already in the works to allow tokens on other chains to be minted and redeemed to and from the Bitcoin blockchain.