Coinbase: Massive Buy Demand Caused Bitcoin Cash Launch Hiccups

Coinbase has blamed overwhelming demand from buyers for issues experienced during its launch of bitcoin cash trading last month.

AccessTimeIconJan 10, 2018 at 2:30 p.m. UTC
Updated Sep 13, 2021 at 7:21 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Cryptocurrency exchange startup Coinbase has blamed overwhelming demand from buyers for issues experienced during the launch of bitcoin cash trading on its GDAX exchange last month.

The firm added support for bitcoin cash on Dec. 20, but soon after moved to disable trading of its newest asset – an offshoot of bitcoin with key technical differences. Hours later, trading against USD was reinstated.

GDAX general manager Adam White said in a blog post explaining the issues, that around 90 percent of initial requests were from people looking to buy bitcoin cash.

White wrote:

"We paused trading on the BCH-USD book due to significant volatility caused by heavy market buy demand that resulted in insufficient liquidity."

The low liquidity also caused the price of the cryptocurrency to shoot as high as $9,500, far higher than listed on other exchanges, he added.

According to the post, in the 2 minutes and 40 seconds after BCH/USD trading commenced, over 4,000 orders were placed, 3,461 matches occurred and trading volume reached $15.5 million.

Continued liquidity problems meant the relaunch of BCH/EUR and BCH/BTC books to be postponed until after the winter holidays, "when there would be a higher likelihood of meeting liquidity standards needed to enable trading."

Despite the firm's "best efforts to create a fair and orderly market," the launch did not go as expected, White acknowledged.

Addressing allegations of possible insider trading around the BCH launch, the post also stated:

"On November 13th, 2017, employees were notified of the decision to support BCH trading and were explicitly prohibited from buying and selling BCH. All employees were also barred from sharing this information with anyone outside of Coinbase."

Soon after the launch, the firm said it would commence an investigation into whether any employees may have violated those rules.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Coinbase.

Coinbase image via CoinDesk archives

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.