cryptopotato.com
Small events that occur on significant exchanges can often have an enormous impact on the price of bitcoin and the Altcoin market. The upcoming data migration of Bitfinex and Ethfinex is no exception.
Today it was announced that on January 7th, 2019, Bitfinex and Ethfinex would be offline for a period lasts 3-7 hours for IFinex to complete the final stage of its data migration to dedicated bare-metal servers. IFinex (the financial technology company that owns Bitfinex and Ethfinex) will be switching from AWS cloud to a new Swiss data center with its dedicated servers and premium hardware designed for high volume trading. IFinex has cited increased speed and advanced security as the two main reasons for why they are making the migration to the Swiss data center.
The temp shutdown means that traders on Bitfinex and Ethfinex won’t be able to access their accounts for several hours. Due to Bitfinex being one of the largest exchanges in crypto (with an average 24-hour trading volume of $372m), we shouldn’t be surprised to see price manipulation occurring while the exchanges are offline. A similar incident occurred earlier this year with Bitmex:
The margin trading exchange announced that scheduled maintenance would take place on August 21st, 2018. Shortly after the exchange went offline, the price of BTC spiked by more than $400 (from $6,466 to $6,745). When Bitmex went back online, a massive amount of short positions got liquidated at once and granted Bitcoin another $300 gains.
Many people claimed the price action was inorganic, and that the temporary shutdown provided an opportunity for some market maker to take advantage of highly leveraged short sellers who would be unable to close their positions because they would not have access to their accounts while the price was spiking.
There’s no doubt that such an incident could happen again, especially since Bitfinex also allows shorting and leveraged trading.
Hoping For a Better Reputation on 2019
As we enter into the new year, many are hoping that 2019 can be a fresh start for the crypto market, as the crypto space try to shed a poor reputation that consists of price manipulations, ICO scams and wallet hackings.
Ultimately, seeing Bitfinex and Ethfinex go offline for hours without any signs of price manipulation would be a positive step in the right direction.