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eToro facing unprecedented crypto demand from users

eToro is struggling to keep up with the increasing demand for cryptocurrency on its platform.

Image by: Wikimedia Commons

Thu, 14 Jan 2021, 09:43 am UTC

The crypto market rally, which started last year and saw Bitcoin briefly rising past $41,000 early this month, continues to this day. While the market retreated last week, it has already recovered some of the lost ground with BTC currently trading above $38,000 based on data from Coinmarketcap.

With various cryptocurrencies surging past their previous all-time highs during the 2017 rally, demand for these digital currencies has been rising as well. In fact, the Israel-based crypto exchange platform eToro is having a hard time executing orders from its clients due to the high demand for cryptos.

“The unprecedented demand for crypto, coupled with limited liquidity, presents challenges to our ability to support BUY orders over the weekend,” eToro warned according to Cointelegraph.

The exchange warned its users of “possible limitations to crypto BUY orders” in the coming weekend. “We are seeing unprecedented conditions in the crypto markets, which have led to increased demand for crypto from eToro users, both old and new,” wrote eToro on its notice, which was posted on Twitter by crypto trader and Youtuber Crypto Koala. “We are doing all we can to manage this demand and to maintain the best possible customer experience.”

This unprecedented demand is, in part, due to eToro’s success. Brad Michelson, the crypto exchange platform’s marketing manager, said that a staggering 380,000 new users had opened accounts in the past 11 days.

As of January 9, 2021, more than 17 million users are registered on eToro’s platform. The attractively high prices of most cryptocurrencies also resulted in an increase of the trading volumes in the platform, which rose 25 times year-on-year.

Former eToro market analyst and Quantum Economics founder Mati Greenspan said that the notice was “a symptom of a potential upcoming liquidity crunch” but warned users not to move their holdings from the platform. “I wouldn't be moving anything right at this time. Buckle up bro,” Greenspan tweeted.

Cointelegraph said that there a possibility that eToro might implement some measures such as imposing restrictions on the maximum exposure per crypto. This means that some users “might need to wait in order to buy in.”

Greenspan believes that it’s only a matter of time before other crypto exchanges experience liquidity issues similar to that of eToro as other platforms have also experienced surging trade volumes. For instance, Coinbase’s daily trade volume reached $9.5 billion on January 12, up 50 percent from its previous ATH of $6.5 billion on January 9. Binance’s daily trade volume also soared to over $30 billion on January 12, a marked increase from its previous ATH of $23.7 billion.

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