Bitcoin dives! $38,000 exchange rate reappears with technical issues, Musk's tweet leads to a drop back to square one

Yesterday, on 1/29, Tesla's founder Elon Musk changed his Twitter bio to Bitcoin, causing Bitcoin to surge by 20% at one point. However, various exchanges such as Binance, Coinbase, Kraken, and Bittrex experienced consecutive shutdown issues, seemingly leading to further market panic, and Musk's pump nearly returned to its original state.

In recent days, both traditional financial and cryptocurrency markets have experienced unprecedented volatility, including a series of effects triggered by the GME short squeeze event and Elon Musk's Twitter pump.

Furthermore, zero-fee investment platform Robinhood restricted trading on certain stocks, possibly leading some traders and new users to flow into the cryptocurrency market. Although this cannot be definitively confirmed, Binance stated that the shutdown issues were due to a large influx of new registrations.

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Unable to Process USD Orders

According to Coinbase's Twitter announcement, due to a series of technical issues caused by a surge in trading volume, some user transactions were unable to be completed. Screenshots circulating on Twitter showed the exchange prohibiting USD transactions.

Coinbase disabling purchases

You're a company that is looking to go public, how do you think this makes you look?

Source: @DocumentingBTC pic.twitter.com/oJYrHPmxs2

— Cryptonary 💎🙌🏻 (@cryptonary) January 29, 2021

A few hours later, Coinbase tweeted again stating that trading services had resumed normal operations and they would be closely monitoring in real-time.

Coinbase Announces Plans for Direct Listing

It was reported last month that Coinbase had submitted an S-1 form to the U.S. Securities and Exchange Commission for an IPO. However, the latest development states otherwise, with the exchange announcing on the 29th plans for a direct listing.

Unlike an IPO, a direct listing involves offering shares for trading on the public market without issuing new stock, without the need for underwriters, and is typically not used as a means to raise funds.

Furthermore, following restrictions on cryptocurrency trading on eToro and Robinhood, Coinbase's ranking in the App Store has once again risen.

Binance's Binance

Binance also faced technical issues yesterday, with a tweet stating that withdrawals for users were temporarily suspended due to a large number of new registrations, assuring users that their funds are safe.

#Binance will be suspending withdrawals temporarily in order to address a large increase in requests from new unique users.

Rest assured funds are #SAFU and we apologize for any inconvenience caused.

Updates to follow.

— Binance (@binance) January 29, 2021

Kraken, Bittrex

Similarly, Kraken has been experiencing connection issues since yesterday as reported, while Bittrex claimed an increase in traffic and some technical problems. It's worth noting that although Bittrex seems to have faded from the mainstream exchange scene, they are actively updating their products and have recentlylisted tokens such as GME and AMC.

As of now, Elon Musk's tweets have caused Bitcoin to rise from around $32,000 to a peak of $38,664, but it has since retraced to $33,300 before the deadline.

Earlier in early January, there was a reported outage at Coinbase when Bitcoin dropped from $40,000 to around $34,000. Analyst Willy Woo pointed out that when the spot market collapsed at $38,000, Coinbase also faced issues processing buy orders.

This caused Coinbase's Bitcoin price to be $350 lower than other exchanges at that time, affecting the contract trading reference prices on other platforms, leading to a destructive downward trend in the speculative market. The similar high price point and Coinbase's buy order technical issues this time inevitably raise suspicions about whether Coinbase is indeed one of the culprits.