Bitcoin’s mempool saw a sudden spike in size yesterday, meaning there are a number of transactions not being confirmed in a timely manner.
The Bitcoin mempool is the pool of unconfirmed Bitcoin transactions on the Bitcoin network. Once a Bitcoin transaction occurs on Bitcoin’s blockchain, it is not immediately added. Instead, it goes into this pool of in-motion transactions where it waits for confirmation.
Each Bitcoin full node is connected to this mempool, including the miners. Bitcoin miners will select some of the transactions from this mempool, usually the ones that pay the highest fees, and then they add them to a block.
Only the transactions chosen by the miners get added. All other transactions stay in the Bitcoin mempool and need to wait until another block is minted.
Just by looking at the screenshot above (courtesy of blockchain.info), you can clearly see the sudden spike felt around noon (UK time) on Tuesday. At its largest point, over 35,000 transactions were waiting to be confirmed.
If the mempool continues to increase, it could mean we’re about to experience a sudden price move.
The last time we saw this many unconfirmed transactions was during late November 2018, around the 19th.
Do you want to guess the fate of Bitcoin’s price during the same time frame?
It took a huge dive from about $5,600 to $4,400, which represents a 21% drop.
I’m not saying the same is about to happen, and indeed the size of Bitcoin’s mempool has reduced since yesterday, but traders should still trade with care. Of course, it’s also worth noting that there have been similar spikes that have led to upwards price movements in the past as well.
Safe trades!
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.