Yesterday’s frantic cryptocurrency rally was seemingly without end. However, an unexpected crash of the major cryptocurrency exchange Coinbase seemingly brought the crypto rally to a grinding halt. In fact, the price of Bitcoin briefly fell from over $13,000 to around $11,000 as Coinbase became unavailable.
Was a Coinbase Crash responsible for halting the crypto rally?
The news that Coinbase was not operational was confirmed by an announcement on the crypto exchange’s status website. Moreover, at 1:47 pm PDT Coinbase revealed that it was investigating an issue seemingly affecting its API and website.
This reveal coincided with a wave of sell pressure. At the time, the price of Bitcoin was well past $13,000 and seemingly headed towards the $14,000 line. Nevertheless, it would seem that the crash of Coinbase sent Bitcoin’s rising price crashing down.
It is unclear whether the issues with Coinbase could have brought about a wider crypto panic. Specifically, some commenters have speculated that the unavailability of Coinbase could have given investors cold feet, much like in a traditional “bank rush”.
With that said, the massive volumes suddenly handled during yesterday’s Bitcoin rally could likely have played a part in bringing Coinbase down. Peter McCormack tweeted a cheeky response to this news, highlighting that “Coinbase is down. Bitcoin never goes down.”
Is there another reason for the Bitcoin blip?
It is worth noting, however, that it is far from universally accepted that Coinbase’s brief blip is what really halted the crypto rally. Although several crypto news outlets have published articles with headlines such as “Bitcoin Falls by $1,400 After Crash of Major Crypto Exchange Coinbase” it is not entirely intuitive that Coinbase’s brief crash also crashed the Bitcoin price.
Specifically, yesterday saw the premier cryptocurrency engage in a frantic Bitcoin rally. As such, it is highly reasonable that Bitcoin needed some time to consolidate its gains. Furthermore, data from Coin360 suggests that the Bitcoin sell-off driving the price of Bitcoin down was, in fact, started before Coinbase even went offline.
Moreover, Coinbase was comparatively quick with fixing the issue. The crypto exchange reported that it had “identified the problem” by 2:13 pm PDT. Furthermore, the site reported that the problem had been “solved” by 2:38 pm PDT.
As such, the whole incident took less than one hour – although it is undoubtedly unfortunate for those trying to trade cryptocurrencies on Coinbase during this time. At the time of writing, Bitcoin is trading around a $12,710 level.
Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the blockchain industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.