eToro which is an Israel-based exchange platform is feeling it quite difficult to cope up with the demands of the crypto traders as per the email sent to the users earlier today.
“The unprecedented demand for crypto, coupled with limited liquidity, presents challenges to our ability to support BUY orders over the weekend.”
Resulting in which, the platform warns about the “possible limitations to crypto BUY orders” and that “spreads on crypto-assets may also be much wider than usual.”
eToro now becomes a victim of its own success. Yesterday, Brad Michelson, eToro’s marketing manager publicized that in the past 11 days, nearly 38,000 new users opened accounts, and their trading volumes increased 25 times than the same time in 2020. As of January 09, 2021, eToro owned more than 17 million registered users.
Mati Greenspan who is Quantum Economics founder and formerly a market analyst for eToro told Cointelegraph that the warning notice was “a symptom of a potential upcoming liquidity crunch.” He also suggested the users on Twitter to move their funds off the platform.
Once eToro implements the foreshadowed measures, users will be restricted on maximum exposure per cryptocurrency. They will also be unable to place new buy orders. Greenspan further explains that it means some users “might need to wait in order to buy in.”
Last week, the eToro exchange restricted European users from margin trading due to the increased market risks. The exchange also increased the minimum deposit amount by 400% to $1,000 to get on top of new registrations.
Other exchanges are also seeing an increase in their trade volumes. Coinbase exchange’s daily volume reaching $9.5 billion on January 12, which is increased 50% from its previous all-time high of $6.5 billion on January 9. Binance Exchange also recorded an increase of over $30 billion on January 12.
Greenspan believes that it is highly likely that other exchanges will also start to hit liquidity issues in the near future. Concerns regarding the limited Bitcoin supply have risen to the foreground in a period of six months with Grayscale snapping up Bitcoin at an alarming pace. The firm presently has $20 billion under its control as BTC buys outstrip mining production by three to one throughout December 2020.