According to a recent notice from trading giant eToro, customers have been advised that there could be disruptions to its cryptocurrency trading services due to ‘unprecedented demand’.
It went on to state that it is seeing ‘unprecedented conditions on crypto markets’ as Bitcoin prices and total market capitalization hovers just below their all-time highs. eToro officially launched its crypto trading platform and wallets in the U.S. in March 2019, so it did not experience the massive bull run of 2017 when most altcoin prices were much higher than current levels.
Crypto Liquidity Squeeze
“The unprecedented demand for crypto, coupled with limited liquidity, presents challenges to our ability to support BUY orders over the weekend.”
The notice also stated that spreads on crypto-assets may also be much wider than usual, meaning that the difference between buy and sell prices will increase due to the liquidity squeeze.
The notice was retweeted several times by industry observers such as video blogger Alex Saunders who called it the ‘halving effect’;
— Alex Saunders 🇦🇺👨🔬 (@AlexSaundersAU) January 13, 2021
The platform, which launched staking services in October, may take measures to limit its user’s exposure to crypto assets by setting a maximum exposure amount per asset per client or temporarily suspending the ability to place new crypto buy orders.
Cryptographer and Bitcoin precursor HashCash inventor, Adam Back, commented;
“”Sold out”, is fun. But really price goes up, until weaker hands sell. And source from other exchanges if a platform has net buyers so you have spreads. Or someone with multiple exchange accounts opportunistically arbs the spread.”
eToro marketing manager, Brad Michelson, commented that in just the last 11 days, eToro has opened 380,000 new accounts, and its crypto trading volume is running 25 times higher than last year.
Limitations and Restrictions Likely
On January 9, the exchange slapped a minimum deposit requirement on new users in order to its existing customer base of around 17 million.
“To manage demand & ensure our existing community of 17M registered users can continue to access our services uninterrupted, we have temporarily increased the minimum deposit amount for new users to $1,000.”
Quantum Economics founder and former senior market analyst at eToro, Mati Greenspan, said it’s highly likely that we will see this situation occurring on other platforms in the near future as Bitcoin prices have been predicted to hit six figures this year.