Key Points
- Technical issues at Coinbase are similar to the past problems of Facebook, according to Bitwise CIO Matt Hougan.
- These issues are unlikely to affect Bitcoin ETFs, particularly those held by institutional clients.
Coinbase, a prominent cryptocurrency exchange, has been having technical difficulties for the third time in less than ten days, coinciding with high trading volumes. Bitwise CIO Matt Hougan has compared these issues to the past technical glitches of Facebook, indicating that these problems did not hinder the social media giant's growth.
History of Tech Giants
Hougan reminded everyone that even though Coinbase had experienced crashes during previous bull markets, it still managed to grow exponentially. He cited the example of Facebook which, despite frequent crashes in its early days, managed to amass billions of users.
Coinbase announced on Thursday that it was dealing with high support volume and response times might be delayed beyond 48 hours. This statement came after Monday's revelation that the trading platform was facing issues due to heavy crypto trading, which resulted in some customers' accounts showing zero balances. Similar issues were reported less than a week ago as Bitcoin's price surged.
Impact on Retail and Institutional Clients
Hougan believes that these issues are primarily affecting retail users. In contrast, institutional clients who have chosen Coinbase as their custodian for their spot Bitcoin ETFs are likely unaffected. He explained that "Institutional has been fine, and custody is a separate entity altogether and unaffected. Most ETFs trade through multiple OTC counterparties that tap into global liquidity, and there is plenty of liquidity in non-Coinbase platforms."
Coinbase serves as a custodian for Bitwise's spot Bitcoin ETF, which trades under the ticker BITB. As of Friday, this exchange-traded fund had approximately $1.8 billion in assets under management.
