Bitcoin Rally Interrupted By Coinbase Outage, Services Back Up Now
Bitcoin Rally Interrupted By Coinbase Outage, Services Back Up Now
Coinbase, ranked second in trading volume by CoinMarketCap, faced an outage right at the moment that the Bitcoin price had reached $63,144.30, a peak unseen since 2021. Also other cryptocurrencies like Cardano (ADA) saw a noticeable increase in price until the Coinbase outage caused all these other cryptocurrencies to drop in price as well.
The service disruption at Coinbase had a significant impact on the trade as the Bitcoin price plummeted directly. The exchange acknowledged the issue, attributing it to an unprecedented traffic surge, as confirmed by Brian Armstrong, the CEO and co-founder.
We are dealing with a LARGE surge of traffic – apologies for any issues you encounter. The team is working to remediate.
— Brian Armstrong 🛡️ (@brian_armstrong) February 28, 2024
Apps are now recovering.
— Brian Armstrong 🛡️ (@brian_armstrong) February 28, 2024
We had modeled a ~10x surge in traffic and load tested it. This exceeded that number.
It's expensive to keep services over-provisioned, but we'll need to keep working on auto-scaling solutions, and killing any remaining bottlenecks. Thank you for… https://t.co/JXVppV57AF
The glitch revealed zero balances in user accounts on Coinbase’s U.S. platform and problems to trade. The exchange promptly announced an investigation into the anomaly, assuring users of the safety of their assets. Armstrong later disclosed that traffic had surpassed tenfold the anticipated volume, highlighting a need for enhanced auto-scaling solutions to accommodate such demand spikes.
Unlike Coinbase, competitors such as Kraken reported no issues. The market has since this morning taken back from it’s loss caused by the outage and is at the moment of writing $62,656.11 for Bitcoin. Also the other cryptocurrencies worked their way up again.
It’s not the first time that an outage occurs on the Coinbase exchange during periods of intense market activity. By the evening, Coinbase reported the restoration of full service, though some discrepancies in account balances still persisted.
Impact on the short and long term of exchange outtages
During a rally, traders and investors are highly active, buying and selling to capitalize on price movements. An unexpected outage like this clearly has shown that a significant volume of trade was removed from the market, causing abrupt price movements as orders could not be placed or executed on the affected exchange.
Coinbase knowns that confidence among traders and investors can be shaken by outages, hence their rapid response. Reliability is crucial in trading platforms, and disruptions, especially during critical trading periods, lead to decreased trust. Sure thing is that those users looking to sell at a peak (and this surely was one) will have incurred financial losses due to an inability to execute trades.
Major exchanges like Coinbase contribute significantly to the liquidity of the cryptocurrency market and this outage has led to a temporary reduction in market liquidity affecting the market depth and spread.
Note that frequent or high-profile outages like this can attract regulatory attention. Authorities concerned with market stability, investor protection, and financial infrastructure resilience may step in with inquiries, regulations, or sanctions, which can have broader implications for the exchange and the industry.
Coinbase has every reason to prevent this from happening again.
