Bitcoin recently took a huge hit across exchanges, falling below $700 in a significant 10% dip in recent price advances. The crash culprit? Bitfinex timeout and an auction that’s linked to the Silk Road, amounting to about $19 million.
ANNOUNCEMENT: Silk Road 3.0 is BACK ONLINE and open for business. The team did a massive security overhaul on the site to try and make it more secure and anonymous.
From as high as $760 over the weekend last week, the Bitcoin price tumbled down to a lowly $698 come Monday, June 20th. This drastic occurrence of the BTC/USD price plunge is thought to be due to the Bitfinex trading outage and auctioning off massive Silk Road-related Bitcoins in Australia.
Bitfinex Unscheduled Downtime
Bitfinex is a fast-growing worldwide exchange, achieving its position among the highest ranks regarding of raw trading volume. The Bitcoin exchange holds the biggest USD trading volume at 37% of all their trades in USD.
Despite the leading Bitcoin trading platform’s scheduled maintenance done on the 17thof the month, which lasted for approximately an hour, trading was paused starting around 5PM Eastern Time. Bitfinex cited “server migration issues” as the main source of the maintenance delay, compromising their projected re-launch a couple of times. This allowed bursts of cancellation requests while they were attempting to fix the issue.
The initial update stated that they were recovering from the internal network issue, followed by an identified status revealing an ongoing investigation of a trading-impactful infrastructure issue and likewise clarifying that it did not involve funds or system security. Another update showed an investigating status as they are experiencing platform problems, altogether coming with the assurance of resuming operations in the soonest possible time.
The downtime continued to the night causing a lot of panic and several Bitcoin traders’ dismay, with some having lost their investments since deals could not be closed, and considering the millions involved in Silk Road-related auction. It went up again by 9:50, but had to be taken down again on June 21stdue to instability in the network within their data center, letting traders know that they are working with their hosting provider during this second halt on Bitfinex services.
June 20th marks the same day of the flooding of $19 million Bitcoins in an Australian auction associated with the Silk Road. These are proceeds of the crime connected to the closure of the Silk Road drug marketplace and Ross Ulbricht’s conviction in 2015, forming part of the civil forfeiture of Silk Road Bitcoins. Bidders of the 48-hour sealed auction include digital asset managers, digital currency exchanges, mostly American and European investment banks as well as hedge funds.
The outage that could have been triggered by the vastness of Silk Road Bitcoins in an Australian auction was only temporary but served as a reminder of Bitcoin’s volatility amidst its growth. Bitfinex has since reemerged online and trading exchanges are resumed.
Prices and volume are expected to increase once again to their pre-outage levels and continuously recovering from the uncertainty. Bitcoin price showed signs of immediate recovery with a strong sell-off, albeit would go a long way for several more weeks especially with traders exhibiting cautiousness and giving more attention to detail and potential risks.