For the first time, in 7 years, Bitcoin had crashed deplorably due to the coronavirus outbreak. However, investors are wary of a more pertinent issue.
Electronically-triggered liquidations of leveraged positions had been found in Futures exchanges; these had been putting pressure on prices. Meanwhile, Spreads jumped between exchanges. Furthering financial-related stress, investors were locked out of the market for over an hour after two exchanges bugged down.
Not surprisingly, the prices for Bitcoin went down by almost 40% on March 12th. Since Spring 2013, this is said to be the biggest one-day drop prior to it relatively recovering by 16% the day after.
Also in 7 years, volatility had climbed up exponentially to its highest. Volumes for the major cryptocurrency exchanges had climbed to $30.8 billion from March 12-13, reported to be the four highest two-day totals on record.
With the spread of the coronavirus not seeing any slowdown, Gemini, a New York-based exchange stated that it went offline for at least 90 minutes. BitMEX, an exchange based off of Seychelles, considered one of the biggest platforms in the world for leveraged derivatives trading, bugged down two times, for 45 minutes.
A statement from Gemini informed that their management “observed a technical issue impacting a subset of our customers.”
“In an abundance of caution, and to protect the integrity of our marketplace, we paused the market to resolve the issue and ensure all market services were back online in a healthy state prior to reopening,” the representative added.
No further details were disclosed; media outlets weren’t made privy if the issues were caused by actual market movements.
The BitMEX spokesperson informed that the outages were because of denial-of-service cyberattacks that prevented messages to be delivered to its trading engines. The statement had cleared that the attackers, who were not identified, “waited for the moment their attack would make the most market impact” and overwhelmed the platform “during a moment of peak volatility.”
What this meant was that the key components in crypto markets are fragile, thus highlighting the high-risk asset that large investors usually stay away from.
Despite being able to carry on amidst the economic turmoil, the Gemini and BitMEX incidents may also inspire doubts that bitcoin’s infrastructure is strong enough to stand in stead of fiat cureencies.
“There’s no way to say it’s good for the ecosystem when exchanges go down,” Crypto Fund Digital Asset Capital Management representative, Richard Galvin stated.
