Once again, the leading cryptocurrency exchange platform Coinbase has experienced a bit of unexpected downtime. Like previous examples, the drop in service coincided with sudden swings of Bitcoin volatility.
Many in the community decry the company’s woeful lack of preparedness for heightened traffic whereas others suspect malpractice.
Would it Even be a Bitcoin Rally if an Exchange Didn’t Crash?
Bitcoin initially crossed the $8,000 mark at around 11:00 GMT last night and continued pumping to hit a local high of $9,470 before pulling back slightly.
Following such a dramatic rally, Coinbase, one of the most popular trading venues for digital assets, suddenly announced unexpected downtime. Along with a link to the site’s service status updates page, the exchange wrote via Twitter:
We are currently experiencing intermittent downtime on coinbase.com. We’ve identified the issue and are working on a fix. We’ll let you know when we’re back up!
The service status page details that around 18:40 GMT, the team started investigating the issue. Around ten minutes later, the exchange claimed that a fix to the problem had been implemented.
However, at around 19:30 GMT, the exchange’s status changed back to ‘investigating.’ Another 15 minutes later, it claimed once again to have identified the issue and was working on a second fix.
Another Swing, Another Exchange Faces Issues
Traders facing outages during such volatility are often quick to cry malpractice. Some more suspicious market observers contend that exchanges deliberately freeze systems to try to control dramatic moves.
Sure enough, there were some that replied to the Coinbase Support tweet with similar sentiments. One respondent wrote:
“… everytime there is a spike and big profits @coinbase always had an issue where people cant get their profits. I watch everytime and always the same thing, watch for other exchanges soon too.”
Although quite a popular theory, the malpractice line doesn’t make a great deal of sense during pumps like what we saw yesterday. Whereas shutting down trading might slow a Bitcoin crash, exchanges have a vested interest in a high Bitcoin price.
Much more likely is that Coinbase and other exchanges aren’t built for the kind of traffic that comes with growing market volatility. Although it’s a much less sinister explanation, it is no less damaging.
Some of those responding to the above tweet argued that it was not a good look for the emerging industry. One called it ’embarrassing.’
Some jumped at the chance to inform Coinbase of the damage such downtime can do to traders:
“Whenever there is a Bitcoin pump there is a problem. This is not the first time. The lack of timely access to your system affects our investments. You have to produce a solution for this.”
BeInCrypto has reached out to Coinbase for an explanation for the downtime or response to those critical of the platform. Although we are yet to receive a reply, the exchange did tell users via Twitter that the issue had been resolved last night. However, Coinbase failed to explain exactly what was behind the drop in service.