It’s been an eventful week for Bitcoin traders, with the price of the cryptocurrency rising above $10,000 per bitcoin on Monday, only to have the price plummet by 14 per cent in only 15 minutes on Tuesday. Although the large spike and subsequent decline would have provided trading opportunities, users of Coinbase, a major bitcoin and cryptocurrency exchange, weren’t able to get in on the action as the exchange crashed just as the price of BTC started its ascent.
According to various media reports, the exchange was offline for about an hour. According to the exchange’s website, the connectivity issues lasted from 16:14 - 16:58 PDT on the 1st of June 2020.
Source: Coinbase
According to Coinbase, the system issues were caused due to observing increased latency. The exchange did commence an investigation into the issue, however, the exchange has not disclosed any further information.
We are currently experiencing intermittent downtime on https://t.co/QuP4CcEF7W. We’re investigating this issue and we’ll let you know when we’re back up. https://t.co/bQTI48KB7G
— Coinbase Support (@CoinbaseSupport) June 1, 2020
The importance of Coinbase
The issues at Coinbase are magnified due to the importance of the exchange, as it is the largest US crypto exchange and the largest bitcoin holder among exchanges with almost 1 million bitcoin.
According to The Block, a crypto news and analysis site, which carried out recent research, Coinbase holds more than double the amount of bitcoin than Huobi, a Singapore-based exchange, and Binance in Malta.
Volatility puts pressure on trading systems
However, Coinbase is not alone in experiencing system outages at critical times. In fact, a number of trading providers have been experiencing platform issues amid higher levels of trading activity in recent months, driven by COVID-19 volatility.
As Finance Magnates reported, in March Robinhood experienced a system-wide outage, which left many users unable to access their accounts. After an investigation, the cause of the outage was found to be stress on its infrastructure—which struggled with an unprecedented load. That, in turn, led to a “thundering herd” effect—triggering a failure of the company’s DNS system.
On the 21st of May 2020, IG Group also experienced a system-wide outage. At the time, clients of IG Group were reporting problems when using the firm’s trading terminals. Several users complained about problems logging into or using the broker’s platforms, as well as having trouble reaching help phone lines.
One day later, the Online Trading provider again experienced technical issues, in which client positions were not appearing on its platform, the company said at the time.
