A wave of cryptocurrency trading coincided with a major outage in bitcoin exchanges and led to restraints on other platforms, reflecting the difficulties traditional brokers have had with a frenzy in stock market activity.
Coinbase Global Inc., a digital currency exchange website, said it was investigating a malfunction on Friday that prevented customers from trading on their web and mobile apps. Another exchange, Bittrex Global GmbH, said an increase in traffic was causing technical problems on its platform.
Coinbase later said trading was back on track and it was monitoring further troubles. A Coinbase spokesperson said a surge in trading was causing the technical issues disrupting trading. Bittrex declined to comment.
Bitcoin was up 4.8% Friday, with bitcoin valued at $ 34,436. The most popular cryptocurrency has surged over the past year, and winning investor converts worried that central banks and governments, in their efforts to counter the economic effects of the coronavirus, risk devaluing fiat currencies.
Robinhood Markets Inc., which is under fire for suspending trading in popular stocks, also slowed activity on its cryptocurrency platform. Robinhood said it has temporarily disabled direct deposits for cryptocurrency purchases citing extraordinary market conditions, its website said.
A Robinhood spokeswoman said customers can still use money that Robinhood has already received from their bank accounts to buy cryptocurrencies.
Wall Street is in an uproar over GameStop shares this week, after members of Reddit’s popular WallStreetBets forum encouraged bets on the video game store. WSJ explains how options trading drives the action and what is at stake.
Coinbase’s outage comes at a delicate time. The company said it plans to go public via a direct listing this week. Founded in 2012, Coinbase is the largest cryptocurrency exchange in the U.S. The San Francisco-based company was recently valued at approximately $ 8 billion and has more users than Charles Schwab Corps
platform.
Wall Street struggled to cope with the crescendo of financial market activity this week. Several retail brokers dealt with outages, and fast traders reported trading disruptions.
For cryptocurrency exchanges, outages are nothing new. The platforms are generally lightly regulated, dominated by private investors and prone to disruptions when activity spikes.
Increased activity in cryptocurrencies on Friday came as popular online brokers restricted trading in highly traded stocks including GameStop Corp.
and AMC Entertainment Holdings Inc.
on Thursday. They responded to massive trading volumes spurred by investors congregating in online platforms like Reddit’s WallStreetBets forum.
Some digital currency advocates believe that investors who can’t trade their favorite stocks have switched to crypto instead.
“What happened this week with GameStop and other highly volatile stocks trading on momentum – these platforms that restrict trading – has prompted people to trade other assets,” said Meltem Demirors, chief strategy officer at the London-based wealth management company. CoinShares. “It avoids many of the problems we’ve seen in old financial markets and so we’ve seen private investors shift.”
An actively traded cryptocurrency Friday was Dogecoin, which was created in 2013 to poke fun at the burgeoning cryptocurrency industry. It is named after a popular internet meme about a dog who couldn’t spell.
According to CoinDesk, Dogecoin was up 250% by 11:30 a.m. ET Friday. At 4:45 PM it had shifted back to 125%.
Dogecoin features an image of the doge meme mascot, a Shiba Inu dog that has been digitally modified to appear everywhere from astronauts to Twinkies. Dogecoin has also become a hot topic on Reddit’s WallStreetBets and SatoshiStreetBets due to its cheap cost versus bitcoin.
Tesla CEO Elon Musk suddenly sparked interest in the coin and tweeted a fake magazine cover Thursday that read “DOGUE.” After its rise, one Dogecoin was worth $ 0.05 Friday. According to CoinDesk, all Dogecoins in circulation are currently worth $ 7 billion.
Musk has also updated his Twitter bio page with “#bitcoin.” That came after Bridgewater Associates founder Ray Dalio called bitcoin “a great invention” in a letter published Thursday.
Write to Caitlin Ostroff at [email protected]
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