The trading giant eToro has recently given out a notice that showed that customers should be prepared for disruptions within its crypto trading services. These disruptions were blamed on the “unprecedented demand” seen within the space at large.
Too Much Demand And Too Little Supply
The trading giant highlighted the “unprecedented” trading conditions that the crypto space is seeing, with Bitcoin’s total market cap and prices gently gracing its all-time highs once more. The eToro trading crypto trading platform was launched within the US back in March of 2019. As such, the crypto exchange platform didn’t have the chance to experience the great 2017 bull run.
The official notice highlighted the incredible demand for crypto, challenging the ability of eToro to support purchase orders. Another key factor highlighted was the current limit on liquidity, as there’s only so much supply and the demand only seems to increase.
Warnings Of Large Spreads As Observers Report
The notice further warned of above-normal increases within the spread, which is the difference between the buy and sell prices. This, once more, is being blamed on the big squeeze on liquidity it’s feeling across the crypto space.
As one would imagine, industry observers piled on top of this notice, retweeting across the crypto twitter space. Alex Saunders, a video blogger, went as far as calling this liquidity squeeze as a result of the halving effect.
— Alex Saunders 🇦🇺👨🔬 (@AlexSaundersAU) January 13, 2021
The Market Will Turn, Just Slower And With more Effort
eToro itself had launched staking services back in October of last year. However, it may now start to actively limit the maximum exposure a user can gain within the crypto space. They can do this by way of setting a maximum exposure amount per asset for each client, or suspending new crypto buy orders altogether. There really isn’t much you can do if there isn’t any stock to buy, no matter how much you offer.
Adam Back stands as an experienced cryptographer, and had invented HashCash, a proto-Bitcoin-like asset. In a comment, he explained that the price would go up until weaker hands start to sell, thus keeping the gears turning, albeit slower. Another thing these people will do is move to other exchanges should any platform hold net buyers, which cause spreads in turn.
“Sold out”, is fun. But really price goes up, until weaker hands sell. And source from other exchanges if a platform has net buyers so you have spreads. Or someone with multiple exchange accounts opportunistically arbs the spread.
— Adam Back (@adam3us) January 13, 2021
Another potential move from crypto holders at this time is capitalizing on the arbitration among exchanges through the use of multiple exchange accounts.
The exchange platform has already started to make restricting moves in order to meet the demands of keeping the money flowing. One of the more prominent ones is slapping a minimum deposit needed to enter the exchange for various new users, in a bid to try the inflow at a sustainable level.