Image by Pete Linforth from Pixabay
Price action of Bitcoin, of course we have seen is dashed crazy, recently BTC had gone from 30,000$ to 41,000$ in a matter of 3 days from 5th Jan to 8th Jan and then later in Jan 11th, BTC fell by almost 40% to 28,000$ , this just shows how unpredictable crypto is!! The concern here is that when these sort of huge crypto moves happen major crypto exchanges get overloaded and collapse.
BTC price volatility - from 30,000$ to 40,000$ and back!!
This means that when BTC is flying high and investors flood crypto exchanges to either buy or sell BTC, the crypto exchanges are likely to suffer a downtime, with them not being functional at a critical time period when the investor wants to book profits for instance.
Sudden exponential increases in crypto trading volumes difficult to handle by Crypto Exchanges
This scenario has played out several times, with the world’s best exchanges - Binance, Kraken, Coinbase, Gemini, becoming non-functional at times when huge spikes in prices of Bitcoin takes place. During crazy crypto raving bull times, trading activity spikes up to such exponential levels so quickly that the servers of crypto exchanges overload and collapse.
Recently, Coinbase experienced an outrage as BTC’s deep sell off happened. At that day, trading volumes in Coinbase was $9.56 billion, which was greater than the crypto exchange’s cumulative trading volume for the month of January 2020, and even greater than Coinbase’s cumulative trading volume for the whole Q1 of 2019!!
Binance’s CEO, Changpeng Zang sums up the reason for Binance Exchange’s degraded performance when BTC reached All Time HIghs of 40,000$ -
"Bitcoin ATH [all-time high] comes with ATH loads"
Crypto Exchanges can’t gear up with additional capacity in time to handle crypto volatility
Crypto Exchanges are not able to upgrade their servers to required higher capacities in time before these sudden exponential spikes in trading activity happen which is why these major crypto exchanges fail to function smoothly at crucial times during such rollercoaster rallies of Bitcoin.
Platforms like AmazonPrime and Netflix are able to anticipate when their servers can experience a huge spike in usage and activity and upgrade their servers in time. This is because it is found that sudden increase in viewership in these platforms happen at times when a new show is expected to get launched.
However, in Bitcoin, it is impossible for anyone to predict when and by how much the price of BTC can rise, and crypto exchanges are not able to prepare for this eventuality bringing about such sudden massive trading volumes in their platform.
That's right; cryptocurrency is very volatile but what I want to understand is: was the recent surge in price of btc organic or was it caused by institutions putting in their organizational funds into the crypto market?
there is FOMO... institutions did put money, but BTC's parobolic rise now was organic...everyone are talking and wanting to buy BTC...check this..
https://cointelegraph.com/news/etoro-warns-users-it-s-running-out-of-crypto-to-trade-due-to-unprecedented-demand
Hello @mintymile
This reality can make many investors afraid. The fact that they may take time to make a transaction and lose because of it. It is complex.
I hope that in some way, soon they will be able to foresee this increase in activity and that there will not be any kind of standstill because of it.
that's impossible as BTC prices are not possible to predict.
However, @josevas217 , I am sure Bitcoins are best not to be sold for now, next 2-3 years, as its actually having a supply crisis. Those guys flooding exchanges due to FOMO at this time, making a mistake.
They should chill and HODL their BTC...but I worry to sell ALT coins properly, DEFI apps may help, or sell off way early taking some profits, ofcourse convert your ALTS to BTC and HODL, that's what I am hearing from people I follow.
But yeah, too crazy, so have to be careful and not tame the market but ride it and get out before there is heavy collapse of any kind. Some profits beter than nothing right and this some profits look like atleat 200%(: , if you cash out before the peak.
Relaxed trading may be better for laid back people like me, who can't trade stuff in finger tips.
The rich folks with bots setting that sell automatically doing the analysis will benifit, but its ok, we are growing along with this crypto market, its indeed super fasinating to observe all this... definitely we make some potfuls of money someway in the end? correct(:
@tipu curate 4
Upvoted 👌 (Mana: 30/150) Liquid rewards.
Not only can they not predict but as BTC prices are so volatile in a correction the exchanges can go bankrupt, at the moment the picture is not clear but if one of these exchange houses becomes illiquid it is likely that all investors will lose their coins.
Hi... Actually, I imply not to trade by selling precious Bitcoins for atleast 2 years. My worry was on cashing out alt coins, if these exchanges go puff...ouch...they are DEFI apps pouring though...don't know if it would help in this situation to convert Altcoin to Dai perhapes and stay then liquidate in exchanges when its required.