Israeli exchange platform eToro is struggling to keep up with the demand from crypto traders, according to an email sent to users earlier today.
“Unprecedented demand for crypto, coupled with limited liquidity, is challenging our ability to support BUY orders over the weekend.”
As a result, the platform warns of “possible restrictions on crypto BUY orders” and that “spreads on crypto assets could also be much wider than normal.”
– CRYPTO KOALA (@Cryptokoala_Aus) January 13, 2021
EToro has fallen victim to its own success. Yesterday, marketing manager Brad Michelson revealed that 380,000 new users had opened in the past 11 days accounts and that trading volumes had grown 25 times higher than the same time in 2020. On January 9, eToro had more than 17 million registered users.
Quantum Economics founder Mati Greenspan – formerly a market analyst for eToro – told Cointelegraph that the warning was “a symptom of a possible upcoming liquidity crisis.” He advised users Twitter against trying to withdraw money from the platform.
I wouldn’t move anything right at this point. Put your seat belt on, bro.
– Mati Greenspan (tweets ≠ financial advice) (@MatiGreenspan) January 13, 2021
If eToro were to implement the pre-specified measures, users would be limited in their maximum exposure per cryptocurrency and may not be able to place new buy orders. Greenspan explained that it simply means that some users “may have to wait to buy”.
The exchange took place last week limited European margin trading users due to increased market risks and increased the minimum deposit amount by 400% up to $ 1,000 in an effort to get on top of new user registrations.
Other exchanges are also seeing increasing trading volumes, with Coinbase’s daily volume reached $ 9.5 billion on Jan. 12, up more than 50% from the previous record of $ 6.5 billion on Jan. 9. Binance is also over top of $ 23.7 billion, registering more than $ 30 billion on Jan. 12.
It is only a matter of time before we see other exchanges begin to have liquidity problems, Greenspan believes, saying it is “very likely” that we will see this situation happen on other platforms in the near future.
Concerns about the limited Bitcoin supply available have risen to the foreground over the past six months with investment giant Grayscale picking up Bitcoin at an alarming rate. The company now controls $ 20 billion as Bitcoin (BTC) buys nearly three to one more than mine production in December 2020.