Well right after I posted yesterday that bitcoin had broken through the $3,000 mark all hell broke loose.
The digital currency lost $350 in an 18-minute span and an hour later would fall another $150 before finding a floor at $2,530 or so.
This is why I caution “investors” in the currency. You need to be able to stomach the market gyrations on the up side as well as the down side. If you enjoy roller coaster rides, then this may be the investment instrument for you.
A I write bitcoin sits at $2,743, up 3% for the past 12 hours.
The more troubling aspect of yesterday’s drama was the performance of Coinbase, one of the largest digital currency exchanges.
The platform was “down” for a good part of the day, while prices were cratering. Above is the tweet the company put up yesterday at 2PM EDT.
“Investors” could not log on to their accounts and pricing information was spotty at best with no ability to trade. This needs to be rectified immediately if the cryptocurrencies are going to have broader appeal. You can’t have a major exchange go down when traffic spikes.
This is the second time in a month Coinbase has suffered an outage due to high trading volume. This lack of quality control leads me to believe that the exchange did not want to suffer a liquidity squeeze as sellers were trying to get out of the market.
If that is the case, this could be the first sign of trouble in the cryptocurrencies.