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Bitfinex Outrage

The price of bitcoin has fell below $700 on 21st June,dropped more than 10% aggressively to recent level.

The decline came just a day after price passed $780 level of highest price in 28 months, it is good for this digital currency but investors doesn’t feel the same.

Bitfinex, a Hong Kong based bitcoin exchange, announced the outage at roughly 9:30 UTC, bitcoin price was down approximately 3%. Until 13:45 UTC, the digital currency had fallen to about $650, more than 10% below the day’s opening price.

Users reaction

Bitfinex Users were clearly very unhappy with this situation and expressed their views on reddit. One of them expressed his disappointment and called it a crime.

He actually explained the situation of exactly what happened..

When btc price started getting down. At the time when it was $715, the site was shut down and also disabled the withdrawals as well and was down for several hours. By the time of opening again btc price had dropped down to $650, about 10% down from the day’s opening price.

That caused a log of loss to them as the withdrawals were disabled so they were not able to move the fund and trade on other exchanges as well. The margin traders were affected a lot and unable to close their risky position.

Clearly with his comments on reddit he was really frustrated and angry with what happened.

Others users also were unhappy with this outage and shown their disappointment.

Another user said “Bitfinex and their behavior today was not optimal. It was also light years of progress from where we were last rally. They must evolve their platform to compete with the next generation of systems. Systems built with scaling, hardening, performance, usability…all from the get-go.

Some expert views for that bitfinex outrage: Once bitcoin’s price began falling sharply, this helped fuel a “powerful long squeeze” that drove prices down further, said Zivkovski. As a result, he posited that “a snowball effect ensued”.

Max Boonen, founder of market maker B2C2 Ltd, also weighed in on bitcoin’s sharp drop, stating that the outage affected traders who held short and long positions.

“The lower the price went after the outage, the larger the margin calls on Bitfinex when they would reopen,” he explained.

Similarity with Mtgox

Although Bitfinex is now back up, It is not fully clear what exactly happened or what led to this devastating error that sent bitcoin’s price down by $80 in minutes last night. Undoubtedly a full update and investigation report from Bitfinex will follow as traders expected to have explanation from them. Otherwise no one will trust this exchange that went down for hours twice within one day, making the market crash and whip out hundreds of millions in value.

Standards in Bitcoin exchanges have considerably increased since the devastating bankruptcy of MtGox which lost almost one billion dollars at the time of bankruptcy. There have been considerably less hacks and monetary losses, especially since last year, but as today’s events show, there are still signs of what may be considered amateurism and what may have been carelessness as the market continues to lack a professional exchange that offers margins or futures, partly due to the snail speed movement of regulators.

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