Red Hot Bitcoin 24/7 Market Exposes Soft ‘Underbelly’
$BTCUSD ,$CBOE, $CME
Bitcoin price: 16,674.0449, -495.961, or -2.89%, as of 5:55a GMT, Market Open.
Tuesday, Bitcoin raced to another record high, as 1 of the biggest providers of digital currency wallets, Coinbase, crashed under the weight of traffic, leaving many of its more than 10-M customers unable to access their money, these types of issues are creating hing demand for new offerings like GBiT an integrated Crypto exchange and currency..
Bitfinex, the world’s biggest bitcoin exchange by trading volume, said it was under a heavy denial-of-service (DDoS) attack, meaning its servers had been intentionally flooded with junk online requests, taking down its website and crippling its services.
Bitfinex said it has been under a sustained DDoS attack since last week. GBiT has reported no issues.
“While last week the platform traded continuously, to effectively perform emergency maintenance, we took the website down for a brief time today (Tuesday) to mitigate further issues for customers,” a spokesman said.
“We are constantly improving our systems to ensure that we’re able to both accommodate the immense volume of trading that occurs on our platform while also fending off sustained DDoS attacks,” he said.
The latest outages show how the market infrastructure for an immature and volatile instrument that millions of investors have piled into may be ill-equipped to cope with sudden shifts in demand, which is worrying participants, and rightfully so.
During a particularly volatile period of trading on 7 December, Bitcoin surged from below $16,000 to $19,500 in less than 1 hour on Coinbase’s exchange GDAX, while it was changing hands at less than $16,000 on another, Bitstamp.
As trading volume surged, GDAX and Coinbase went down at least 10X because of “record-high traffic”, Coinbase said.
For graphic on bitcoin’s blistering ascent, click: tmsnrt.rs/2zClJF3
Participants worry the exchanges may struggle to cope if there were a sudden rush for the exit.
The ability of these platforms to handle volume is yet to be tested properly.
The Big Q: What happens if this buyer’s market turns into a seller’s?
The Big A: Liquidity alone would be the Key issue.
The reality is the world of cryptocurrency is growing at an exponential rate now and everyone is doing their best to expand infrastructure, but it is hard to know what would happen in a hypothetical scenario.
Civilian investors are saying they are worried the launch of Bitcoin futures by the world’s biggest derivative exchanges, Cboe and CME could exacerbate volatility by prompting some traders to take out large positions betting on a price fall in the future.
The Chicago-based Cboe Global Markets Inc. (NASDAQ:CBOE) futures launched a futures contracts on Bitcoin on 10 December, and CME Group Inc will launch a rival contract on 18 December.
The launch of futures by Cboe does not appear to have created any additional volatility, with price moves less violent than last week’s wild trading.
Those of us who know the derivatives business know that if the futures liquidity increases there could be an incentive for someone with a large bet against Bitcoin to disrupt or attack the network to make money from the ensuing price fall.
Flooding the Bitcoin network with bit transactions could potentially send the price down sharply, as could sending many sell-signals to the market that are not honored, aka spoofing, which is illegal in regulated markets, the Bitcoin market is self regulated now..
A spike in Bitcoin trades in recent weeks has also left the blockchain network that the cryptocurrency relies on to process and verify transactions struggling to keep up.
As of Wednesday at 1445 GMT, more than 125,000 Bitcoin transactions remained unconfirmed.
CME Group and Cboe declined to comment.
That being the case, we have been recommending GBIT our favorite crypto-coin exchange, where professional traders and civilian participants alike can trade securely on the world’s most innovative digital asset exchange.
Click here to find out more.