An increase in cryptocurrency trading coincided with a major shutdown of the bitcoin exchange and led to restrictions on other platforms, reflecting the difficulties that traditional brokers have had with a frenzy of activity in the stock market.
The digital exchange website Coinbase Global Inc. said it was investigating a flaw on Friday that prevented customers from trading on its mobile and web applications. Another exchange, Bittrex Global GmbH, said that an increase in traffic created technical problems on its platform.
Coinbase later said that trade was back and that it was monitoring new problems. A Coinbase spokesman said a sharp increase in trade caused technical problems that disrupted trade. Bittrex declined to comment.
Bitcoin was up 4.8% on Friday, with a bitcoin worth $ 34,436. The most popular cryptocurrency has risen dramatically in the past year, winning converts from investors worried that central banks and governments, in their efforts to curb the economic effects of the coronavirus, devalue fiat currencies.
Robinhood Markets Inc., which is being criticized for suspending trading in popular stocks, has also restricted activity on its cryptocurrency platform. Robinhood said he has temporarily disabled instant deposits for cryptocurrency purchases, citing extraordinary market conditions, according to his website.
A spokeswoman for Robinhood said customers could still use funds that were already received by Robinhood from their bank accounts to buy cryptocurrencies.
Wall Street is in an uproar over GameStop’s actions this week, after members of Reddit’s popular WallStreetBets forum encouraged gambling at the video game retailer. WSJ explains how options trading is driving action and what is at stake.
The Coinbase outage comes at a delicate time. The company said this week that it plans to go public through a direct stock listing. Coinbase was founded in 2012 and is the largest cryptocurrency exchange in the USA. The San Francisco-based company was recently valued at about $ 8 billion and has more users than Charles Schwab Body
platform.
Wall Street struggled to cope with booming activity in the financial markets this week. Several retail brokers have dealt with disruptions and high-speed traders have reported trading failures.
For cryptocurrency exchanges, interruptions are nothing new. Platforms tend to be poorly regulated, dominated by retail investors and subject to breakdowns when activity increases.
The increase in cryptocurrency activity on Friday came when popular online brokers restricted the trading of highly traded stocks, including GameStop Corp.
and AMC Entertainment Holdings Inc.
On thursday. They were responding to huge trading volumes spurred on by investors who gather on online platforms, such as Reddit’s WallStreetBets forum.
Some proponents of digital currency think investors unable to trade their favorite shares have switched to cryptography.
“What happened this week with GameStop and other stocks traded with highly volatile momentum – those platforms that restrict trading – has led people to trade other assets,” said Meltem Demirors, strategy director at asset management company CoinShares, with London headquarters. “This avoids many of the problems that we have seen in traditional financial markets and therefore we have seen a shift in retail investors.”
A cryptocurrency actively traded on Friday was Dogecoin, created in 2013 to mock the growing cryptocurrency industry. It was named after a popular Internet meme about a dog that it didn’t know how to spell.
Dogecoin rose 250% at around 11:30 am ET on Friday, according to CoinDesk. By 4:45 pm, it had dropped to 125%.
Dogecoin features an image of the doge meme mascot, a Shiba Inu dog that has been digitally altered to appear on everything from astronauts to Twinkies. Dogecoin has also become a popular topic on Reddit’s WallStreetBets and SatoshiStreetBets due to its cheap cost compared to bitcoin.
Arousing a sudden interest in the currency, Tesla CEO Elon Musk tweeted a fake magazine cover that said “DOGUE” on Thursday. After his rise, a Dogecoin was worth $ 0.05 on Friday. All outstanding Dogecoins are currently worth $ 7 billion, according to CoinDesk.
Mr. Musk also updated his bio page on Twitter to say “#bitcoin”. This happened after Bridgewater Associates founder Ray Dalio called bitcoin “an infernal invention” in a letter published on Thursday.
Write to Caitlin Ostroff at [email protected]
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