Are the ultra wealthy Bitcoin killing

Bitcoins could become scarce at Etoro due to excessive demand

Compared to what has been going on in the crypto market for weeks, the price rally of 2017 looks almost like a flash in the pan. At that time, the price scratched the $ 20,000 mark for a long time, then the bubble burst. Three years later we are moving in other spheres. A digital coin has already cost up to $ 42,000, although there has been an initial price correction in the past few days. That doesn't hurt the enormous interest in digital currencies at the moment. Bitcoin is a finite commodity, and that could be on display very clearly again this weekend.

The trading platform Etoro has warned its customers that there could be bottlenecks in crypto assets. "The unprecedented demand in combination with limited liquidity presents us with a great challenge to deal with purchase orders," says Etoro. Although Etoro is one of the experienced companies on the market, this rush was not expected. The company was founded in Israel in 2006 and has 17 million customers. However, 380,000 new accounts have been opened in the past eleven days.

Possible upper limit

This development could result in a limit to the purchase of Bitcoins or other assets on Etoro. This means that the purchase option could be temporarily suspended. However, this would have no effect on selling. A former Etoro analyst and founder of Quantum Economics, Mati Greenspan, interprets this warning as a "symptom of a possible liquidity bottleneck", but does not see a fundamental problem in it.

The notification of the possible bottleneck underscores how trading platforms struggle with the sometimes violent price fluctuations. On Monday, the cryptocurrency fell to around $ 32,000 after hitting a record high of nearly $ 42,000 late last week. Together with the development over the weekend, the price collapsed by more than 20 percent at times. On Thursday the price was around $ 38,000.

It's a picture that Bitcoin investors should have gotten used to by now: Extreme price increases are often followed by a sharp slump. The transaction volume is particularly high on the weekend because traders have more time to let off steam in the market. Unlike stocks, digital currencies are traded 24 hours a day, seven days a week. The massive demand already led to failures in platforms such as Kraken, Bitpanda or Coinbase last week.

Speculative object

Almost everyone can now relate to the term Bitcoin. In everyday life, however, hardly anyone pays with it. On the contrary. Bitcoin has become an object of speculation for large companies and the rich. Last month, the 100 largest Bitcoin addresses gained more than ten billion dollars, reports the online magazine Trending topics. In order to make it into the top 100, one must currently own bitcoins worth more than 330 million dollars. It even takes 2.2 billion dollars for the top ten.

Lagarde wants regulation

ECB President Christine Lagarde has spoken out in favor of global regulation of Bitcoin. This must happen on a global level. "If there is a loophole, it is used," she says. Bitcoin is a highly speculative investment object with "some strange deals and some interesting and totally reprehensible money laundering activities". Lagarde gave no examples.

Cryptocurrencies are not very regulated and are often used for business in the darknet, the part of the internet used for illegal business. In addition, there are repeated attacks by hackers in which digital coins are stolen. (Andreas Danzer, January 14, 2021)