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Binance, CEX.IO cautious amidst surge in crypto demand

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The recent surge in crypto demand has led exchange firms to apply extra caution in their operations.

Reportedly, the rise in the number of new crypto users who wanted to sign-up with one exchange or the other hit its record highest on Friday, 28 January.

Binance CEO, Changpeng Zhao in an interview with Bloomberg, confirmed that user sign-ups and trades jumped to a record high.

Crypto prices surged on Friday after Tesla Inc. founder Elon Musk added a reference to Bitcoin to his Twitter profile and posted a mock magazine cover of a whippet in a red sweater, which users interpreted as a sign of support for Dogecoin.

“We almost ran out of DOGE coin addresses,” Zhao told Bloomberg. “Our system couldn’t generate new addresses fast enough to match new users coming in. It’s crazy.”

Binance, the world’s largest cryptocurrency exchange, said a rush of new users put its systems under stress, forcing it to suspend withdrawals briefly. Afterward, it announced that backlogs were cleared and withdrawal back to normal.

CEX.IO furious crypto was being attacked

Dmytro Volkov, CTO of international cryptocurrency exchange CEX.IO, questioned who might be attacking crypto and the consequence of the Friday anomaly.

In a report shared with BlocDesk exclusively, he said they experienced an irregular high number of new registrer. He said they experienced a similar thing in January during the crypto boom, but now there was more registration of new users than then.

“Right now, the number of new user registrations is about four times higher than usual, he said.

On the contrary, he said it might be a sharp rise in crypto demand or an attempt to launder money through a large number of small accounts.

Volkov, however, said that they are on top of the situation and tracking all anomalies.

“We are tracking the anomalies, verifying all new registrations with KYC, and do not permit money laundering. This may increase the average time KYC, but the security of funds is a priority.

Rise in crypto demand, or what happened on Friday?

Friday was an ecstatic day for crypto holders. Dogecoin was the crypto of the day, surging by over 300 percent, with Bitcoin also rallying to an all week high price at $37,000 after Elon Musk’s endorsement.

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Rise in Bitcoin price between Wednesday and Friday
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Rise in Dogecoin price between Thursday and Friday

The surge in prices of these coins may have led to an increase in demand for cryptos, invariably explaining why exchanges experienced a record high in the number of new signees.

However, recently, speculations have it that there has been a rise in crypto demand owing to its price surge.

The price of Bitcoin rose about 24 percent since the beginning of the year and over 90 percent since the beginning of December.

One Bitcoin exchange-traded product, particularly BTCE, recorded an average daily trading volume of $69 million in the first 11 days of January, the Financial Times reported, citing data from Deutsche Börse where it is trading.

Grayscale Investments’ Bitcoin Trust posted an average daily turnover of almost $1 billion in the first two weeks of this year, which is more than nine times the average in 2020.

Canadian asset manager 3iq says its bitcoin fund has reached a milestone, exceeding one billion Canadian dollars ($785 million) in assets under management.

However, authorities like Chainalysis, Messari, CoinMetrics.io are yet to confirm any recent rise in crypto demand, the sudden rise in new crypto entrants experienced on Friday by exchanges or comment if it was an attack against crypto as speculated by CEX.IO, CTO, Dmytro Volkov.



Source: Binance, CEX.IO cautious amidst surge in crypto demand

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