BTC faces a liquidity crisis on the sell side? eToro is about to be shorted by investors

According to Bloomberg, investors' demand for Bitcoin and other cryptocurrencies on the trading platform eToro is so great that the platform has warned customers that users' buy orders may be restricted.

In a recent email to clients, eToro said:

“Unprecedented investor demand for cryptocurrencies, combined with limited liquidity, has challenged the platform to support buy orders during weekends. Given this, it may be necessary for us to restrict buy orders during weekends.”

Bitcoin broke through $40,000 last week, setting a new record high, but then fell sharply, but investors' demand for digital currencies has not weakened. The Bloomberg article emphasized that unlike stocks, the cryptocurrency market is traded 24 hours a day, 7 days a week, and the trading volume surges on weekends because investors have more free time to participate in market transactions.

An eToro spokesperson said on Wednesday:

“We are notifying clients in advance that there may be buy order restrictions. We obviously hope that we will not need to implement any restrictions, but the crypto markets are extremely volatile at the moment and weekends present the greatest challenges for us.”

According to the email, if eToro implements restrictions, it may set a temporary maximum exposure per crypto asset for each customer and temporarily block customers from placing new buy orders. Last week, the company suspended margin trading services for European investors due to a surge in market risks.

Faced with this round of Bitcoin's rise, eToro, which has a 13-year history and 17 million users, did not expect the market to react like this. In the past 11 days, 380,000 new accounts have been opened on eToro, and its cryptocurrency trading volume is 25 times that of the same period in 2020.

The market seems to have encountered a liquidity crisis for sellers. Netizen Wages to Freedom said: "I believe the recent 25% pullback is due to excessive buyer demand. Bitcoin prices have fallen on exchanges with large buyer demand such as Coinbase, Gemini, eToro and Binance. When I tried to buy the bottom at $31,000, the exchange simply did not accept my buy order." Another netizen left a message saying that he could not even log in to his exchange account for several hours.