By
Chimamanda U. Martha
April 26th, 2024
Coinbase announced that it had registered 10x higher traffic than previously anticipated thus making some customers see zero balances but the issue had since been resolved.
Amid the ongoing crypto bullish outlook that has pushed the global cryptocurrency market cap above $2.6 trillion, leading centralized exchange Coinbase Global Inc (NASDAQ: COIN) has registered significant volume and traffic in the past few days. On Monday, Coinbase announced that its servers were heavily overloaded by heightened customer traffic, thus causing some users to see zero balances.
Nonetheless, the cryptocurrency exchange announced that users’ funds were never impacted, as the technical team handled the issue. Meanwhile, the company has since fixed the issue and indicated that user balances should reflect accordingly.
We have issued a fix which remediated the display issue impacting customer account balances and latency across https://t.co/ohqDivlp6Y. We appreciate your patience. https://t.co/7gsVeIvYMl
— Coinbase Support (@CoinbaseSupport) March 4, 2024
Coinbase has seen its servers fail for the second time in less than five days amid heightened crypto demand. On Wednesday last week, Coinbase co-founder and CEO Brian Armstrong announced that the trading platform has been dealing with a large surge of traffic that exceeded the modeled number.
Notably, Coinbase had anticipated the traffic from retail trading services to spike by 10x in the ongoing crypto bullish outlook. However, Armstrong noted that the traffic in the recent past has grown exponentially, thus leading to server crashes.
“We had modeled a ~10x surge in traffic and load-tested it. This exceeded that number. It’s expensive to keep services over-provisioned, but we’ll need to keep working on auto-scaling solutions, and killing any remaining bottlenecks,” Armstrong wrote.
Coinbase Spot Bitcoin ETF Customers Unaffected
Coinbase custody services were selected by several spot Bitcoin exchange-traded funds (ETFs). During the recent server crashes, the Coinbase Custody services remained operational as more spot Bitcoin ETFs led by BlackRock Inc (NYSE: BLK) continued to pile more coins.
The strain in Coinbase servers could be a huge wake-up call for spot Bitcoin ETF issuers to diversify their custody services. For instance, earlier last month, the Valkyrie Bitcoin Fund (BRRR) announced a strategic partnership with BitGo custodial services to add to its Coinbase Custody deal.
“There are no apparent issues with Coinbase’s institutional custody solutions, so this wouldn’t impact spot bitcoin ETFs. My expectation is that spot bitcoin ETF issuers who rely solely on Coinbase will work to diversify their custodial relationships – but I don’t view today’s events as any sort of catalyst for that. I believe using multi-custodians was always the goal,” Nate Geraci, president of investment advisor The ETF Store, noted.
Bulls Undeterred
Bitcoin price has led the altcoin market in a notable rally over the past few months. Significant cash inflows to the crypto market have been recorded and very the past few weeks despite the notable outflows from the Grayscale Bitcoin Trust (GBTC).
As a result, Bitcoin price has continued to rally against all odds and teased an all-time high (ATH) in the past 24 hours. According to most crypto experts, Bitcoin price could rally to a new ATH before the upcoming fourth halving in April.
