Algorithmic trading blamed for crypto exchange outages

  • The Chief Strategy Officer of crypto exchange dYdX highlights that recent exchange outages were primarily caused by increased workloads from algorithmic trading firms, as reported by Cointelegraph.
  • Following Bitcoin’s surge past $60,000 on February 28, major centralised cryptocurrency exchanges such as Binance, Coinbase, Kraken, and Bybit experienced technical difficulties.

OUR TAKE
As noted by dYdX’s Chief Strategy Officer, Ivo Crnkovic-Rubsamen, the increased workload from algorithmic trading firms has strained exchange infrastructures, leading to technical difficulties during periods of intense market activity. The recent exchange outages underscore the vulnerability of centralised cryptocurrency exchanges to the rapid expansion of algorithmic trading and surges in retail demand.

–Sylvia Shen, BTW reporter

The chief strategy officer of crypto exchange dYdX stated that the recent exchange outages were mostly caused by rising workloads from algorithmic trading businesses and increased retail demand.

Algorithmic trading surge blamed

According to Ivo Crnkovic-Rubsamen, chief strategy officer and technical lead for trading at the dYdX exchange, recent outages at some of the biggest centralised cryptocurrency exchanges have mainly been caused by algorithmic trading firms, as Cointelegraph reported.

Crnkovic-Rubsamen said: “Because there’s so much retail interest and the price action is moving so fast, all of the algorithmic trading firms are vastly increasing the rate of order placements and cancels they want to send to the matching engine to maintain their positions. It’s common for a trading firm to 20 times the output of orders and cancels at a very busy time.”

Also read: Blast Network integration expands Binance Web3 wallet features

Major exchanges face technical issues

Just days after Bitcoin surpassed $60,000 for the first time in more than two years on February 28, some of the most well-known exchanges in the world, including Binance, Coinbase, Kraken, and Bybit, had technical difficulties in the last week.

The investment research company Citron recommended a short selling of Coinbase shares after the brief downtime. According to Google Finance statistics, its shares increased by more than 11.36% in a single day to trade at $229.15.

According to Crnkovic-Rubsamen, certain centralised exchanges, in contrast to decentralised exchanges (DEXs), can set specific trading limitations for individual market makers based on trust assumptions. This adds to the burden during bull market situations.

Sylvia-Shen

Sylvia Shen

Sylvia Shen, a news reporter at BTW media dedicated in Fintech and Blockchain. She graduated from University of California, Davis. Send tips to s.shen@btw.media.

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