Bitcoin’s price went temporarily down to six cents yesterday at GDAX, Coinbase’s bitcoin and other digital currencies exchange, after a planned maintenance went a bit wrong.
GDAX has not responded to our requests for comments in time for publishing, but reports suggest that after a scheduled maintenance, traders were not given sufficient time to put orders back in the order book before trading went live.
BitMEX, a futures bitcoin exchange with some of the highest levels of liquidity, was significantly affected because they use GDAX’s price in their BXBT index. This led to a nearly $400 drop in price, calling all longs. According to reports, the exchange says:
“BitMEX will be refunding those users who were unfairly liquidated due to the pricing discrepancy from GDAX out of our own company funds.”
It’s not clear how much this refund will cost, but BitMEX is one of the most liquid bitcoin trading platform, offering margins of 100x. Losses, therefore, are likely to be considerable.
As for GDAX, we are still awaiting some clarification as well as a post-mortem report. The exchange is regulated, therefore we should expect some clear statement on what exactly happened, why, and how it can be prevented in the future.
Still, any such glitches, are, of course, not a good sign. Moreover, Coinbase recently had a status update which stated that ethereum withdrawals were temporarily halted. It is not clear why there was such pause, but withdrawals were shortly after resumed and now operate as normal.
Although there may not be many losses as far as end users are concerned, this latest glitch reminds us that exchanges are not yet quite at a professional level, with simple mistakes seemingly causing significant ripples, instead of being limited by fail-safe procedures that contain any human error.
However, bitcoin’s overall price does not seem to be affected. The currency continues to trade just above $1,200 with a somewhat stable sideways movement in the past few days after increasing considerably in the last few weeks from around $900 to current levels.