Coinbase Traffic Surge: Users Experience Zero Balances, but Funds Safe; Server Overload Resolved
Crypto News – Coinbase disclosed that it experienced a tenfold increase in traffic, leading some customers to encounter zero balances temporarily. However, the issue has been promptly addressed.
In the midst of a bullish trend in the cryptocurrency market, with its total capitalization surpassing $2.6 trillion, Coinbase Global Inc (NASDAQ: COIN), a prominent centralized exchange, has observed a substantial surge in trading volume and website traffic in recent days. On Monday, Coinbase acknowledged that its servers were overwhelmed due to the unprecedented influx of users, resulting in certain customers seeing zero balances in their accounts.
Nevertheless, the exchange assured that users’ funds remained secure throughout the incident, thanks to the swift intervention of its technical team. Subsequently, the problem has been resolved, and Coinbase assures users that their account balances should now accurately reflect their holdings.
This marks the second instance within a week where Coinbase encountered server failures amidst heightened demand in the crypto space. Last Wednesday, Coinbase’s co-founder and CEO, Brian Armstrong, revealed that the platform struggled to cope with a surge in traffic that surpassed the projected figures.
While Coinbase had anticipated a tenfold increase in traffic from retail trading services amid the ongoing bullish market sentiment, Armstrong noted that the actual traffic surpassed even those optimistic estimates, resulting in server crashes.
The disruption in Coinbase’s services serves as a notable reminder for issuers of spot Bitcoin exchange-traded funds (ETFs) to diversify their custody services. Despite the server issues, the custody services provided by Coinbase remained operational, as several spot Bitcoin ETFs, including those led by BlackRock Inc (NYSE: BLK), continued to accumulate assets.
In response to the strain on Coinbase’s servers, spot Bitcoin ETF issuers may consider broadening their custodial relationships. For instance, the Valkyrie Bitcoin Fund (BRRR) recently announced a strategic partnership with BitGo custodial services to complement its existing arrangement with Coinbase Custody.
According to Nate Geraci, president of investment advisor The ETF Store, there appear to be no issues with Coinbase’s institutional custody solutions, thereby safeguarding spot Bitcoin ETFs from any adverse impacts. However, he anticipates that ETF issuers relying solely on Coinbase will seek to diversify their custodial arrangements, a strategy that was likely their objective from the outset.
Despite the technical challenges faced by Coinbase, the overall bullish sentiment in the cryptocurrency market remains resilient. Bitcoin, in particular, has led a significant rally in the altcoin market over recent months, attracting substantial capital inflows despite notable outflows from products like the Grayscale Bitcoin Trust (GBTC).
As a result, Bitcoin’s price has continued to surge, nearing an all-time high in the past 24 hours. Many cryptocurrency experts believe that Bitcoin’s price could reach new record levels ahead of the upcoming fourth halving event scheduled for April.
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