Cryptocurrency exchanges have continued to face outages this year, as many traders fear volatility spikes. During the maturation of crypto markets, some of the largest exchanges in the world continue to experience issues with their infrastructure. Unlike traditional markets, why does this continue to occur? A Vice President from a large crypto exchange addresses the issue.
Cryptocurrency Markets
According to large exchanges like OKEx, interest in crypto trading has continues to surge this year. Bitcoin is on pace to settle $1 trillion in 2020, putting additional pressures on cryptocurrency exchanges to perform. Traders have already suffered major losses with multiple exchanges having outages during increased volatility.
In traditional markets, traders are able to take advantage of volatility since traditional exchanges rarely have outages. In the event they do, it is usually due to normalized environments that traders are aware of such as a limit up. With the amount of outages still occurring in crypto markets, many traders fear environments of increased volatility.
Cryptocurrency Exchanges And Outages
Ciara Sun, the Vice President of Huobi Global recently shared her opinion on this topic. Huobi Global, one of the largest digital asset exchange currently caters to 5+ million users. Despite the exchange managing significant activity, it still remains one of the few cryptocurrency exchanges that has not experienced an unexpected outage in trading.
In a recent announcement by Huobi Global, Ciara Sun shared some of the reasons why exchanges continue to have issues. Aside from large price swings ( volatility ), Ciara mentioned that many cryptocurrency exchanges have issues with their APP/API/WEB infrastructure.
These technical components tend to get “stuck” and fail, which results in issues pertaining to placing and cancelling orders. It ultimately becomes a vicious circle, causing matching systems to enter overload mode from too many request. When the cryptocurrency exchanges face down time, it has historically resulted in liquidations and massive losses for traders that end up having no control.
Outages This Year
Many top cryptocurrency exchanges have battled the on-going issues in 2020. In March and May of this year, BitMEX experienced 4 total outages, one that even lasted 75 minutes. During this time, liquidations caused heavy sell-offs in the market, causing large losses for many of its users. According to a report by Forbes, these recent issues at BitMEX have resulted in the exchange losing significant market share to other exchanges. Even though BitMEX handles billions of dollars in Bitcoin futures volume, some users have their safety in mind, and are attempting to find better alternatives.
Many users also continue to complain about the Coinbase experience. Back in June of this year, the exchange witnesses unexpected downtime that ultimately fueled a massive Bitcoin sell-off. Another notable outage at Coinbase occurred in April, during a time when Bitcoins price was experiencing significant upward momentum.
What Cryptocurrency Exchanges Are Doing
As mentioned above, Huobi Global prides itself on being one of the few cryptocurrency exchanges that has yet to experience unexpected outages. According to Huobi, they work extremely hard to mitigate user risk by continuously upgrading their systems to support high concurrency and low latency. This can be seen through their recent V3.3.0 and V4.2.0 in which overall transactions per second increased by 50%, and processing speeds saw 100% improvements. In order to manage outages and liquidations, the Huobi infrastructure also places a lot of value in their “mature risk control systems” that leverage leading-edge tech.
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