Cryptocurrency collapse? No Panic!
On the night of Friday, March 13, the price of Bitcoin at some point dropped to $ 3800, Ethereum – below $ 100, which led to the suspension of the work of such large cryptocurrency exchanges as Gemini, BitMEX, Huobi, Bithumb and even Binance.
Was stopping trades special?
There were problems with the execution of orders, trading volume for an hour of a sharp drop on exchanges commensurate with the total capitalization of all cryptocurrencies. This volume was the largest in the history of the cryptocurrency market. Today, 95% of orders are placed by trading bots, which work directly with the API databases provided by exchanges. At peak times, depending on the size of the exchange, the number of requests can reach hundreds of thousands per second.
Today, even on the world’s largest cryptocurrency exchanges, there were errors in processing orders and programmers had to process them manually. In our opinion, the technical problem is obvious, but one should not exclude the fact that the exchanges were engaged in market makers and had fake long orders. In order to have time to change them for short orders, they had to stop trading and change their own orders.
Which exchanges suspended their work at the peak of the fall?
The BitMEX exchange reported a “problem with the cloud service provider” between 02:16 and 02:40 UTC. At the moment, normal operation is restored, representatives of the site said.
Gemini Exchange also announced technical problems. At the moment, “all systems work correctly,” the site reported.
The Bithumb platform warned of delays in accepting and withdrawing deposits in Ethereum and ERC-20 tokens. The problem was later resolved, Bithumb said.
Huobi reported a system overload due to a sharply increased number of user requests, but the exchange also managed to normalize the situation.
Coinbase also reported monitoring problems with sending transactions to Ethereum and ERC-20.
Will cryptocurrencies remain a “Plan B” for investors?
Yesterday, Bitcoin proved to everyone: it is a highly volatile speculative tool. In the hands of institutional investors, all its basic qualities have become even tougher.
Altcoins have confirmed the status of an appendage of the main cryptocurrency, having experienced all the pressure of liquidation of positions. If Bitcoin could encounter inflow of buyers demand due to the opportunity to buy at a huge discount, then trust in altcoins will be restored much more slowly.
What awaits cryptocurrency exchanges?
Worst scenario for any exchange is the loss of users, since any lawsuits are just expenses. Most likely, the current situation will turn out for cryptocurrency exchanges not only a lack of trust on the part of traders, but also sanctions by financial regulators.
Traders around the world raise questions about compensation, but exchanges are not responsible for such incidents. One thing can be said – this situation has once again shown the failure of existing trading solutions. The users can only hope for compensation, but as practice shows, often the management insures well only itself, and not its users.
Should we continue trading on exchanges?
The BitXmi team encourages traders from all over the world not to panic, trade wisely and keep their funds only on reliable platforms. We hope that today’s situation will force traders to pay attention to more modern exchanges, such as BitXmi, which are already based on an optimized code designed for high loads.
Join us and trade safely right now!
Disclaimer: Bitxmi News is a news portal and does not provide any financial advice. Bitxmi's role is to inform the cryptocurrency and blockchain community about what's going on in this space. Please do your own due diligence before making any investment. Bitxmi News won't be responsible for any loss of funds.