Etoro, the trading and investment platform, has warned its customers to prepare for possible restrictions on purchase orders for the upcoming weekend. The company stated that if there is an expected and unprecedented surge in demand for cryptocurrencies, it may be forced to take this and other steps.
Unprecedented demand and limited liquidity
The Israeli company’s warning was to curb the “capability of trading cryptocurrencies on margin” of European investors in the past week. According to reports, the company made this decision to “response to the rising risks in the market.”
In less than a week after the price of Bitcoin plummeted by more than 20% in less than 48 hours, Etoro’s notice implied that customer demand for cryptocurrencies remained high. This plunge caused the value of the entire cryptocurrency market to drop from more than 1.1 trillion US dollars to 854 billion US dollars. At the same time, the recent BTC plunge occurred shortly after the cryptocurrency hit an all-time high (ATH) of over $41,900.
Despite this, Etoro pointed out in the notice that demand for Bitcoin and other cryptocurrencies has exceeded supply. In an email sent to customers on January 13, Etoro said:
The unprecedented demand for cryptocurrencies, coupled with limited liquidity, has challenged our ability to support purchase orders on weekends. In view of this, it may be necessary to restrict cryptocurrency purchase orders on weekends.
Therefore, as part of the steps to curb this unprecedented demand, Etoro stated that it may set “the maximum risk exposure of each encrypted asset for each customer.” In addition, the trading platform may consider “temporarily suspend the ability to place new cryptocurrency purchase orders.”
In addition, a report quoted an Etoro spokesperson who did not want to be named as saying: “Currently, the cryptocurrency market is turbulent, and weekends are the biggest challenge.” This market volatility is reflected in Bitcoin. On January 13, Bitcoin had restored 10% of its value in a 24-hour transaction.
At the time of writing, Bitcoin is trading at approximately $39,341 and its market value is approximately $733 billion.
What are your thoughts on Etoro’s restriction plan? You can share your opinion in the comments section below.
Picture Credits: Shutterstock, Pixabay, Wiki Commons