Binance Pauses Spot Trading for Two Hours due to a Bug
[TL; DR]
Binance crypto platform paused its spot trading services on 24 March after it detected a bug that affected its trailing stop loss.
The prices of BTC and ETH fell by small percentages following the glitch on Binance crypto exchange.
Most Binance users were happy about the way the exchange rectified the problem.
People can sell and buy Bitcoin on Gate.io exchange.
Introduction
Cryptocurrency exchanges and DeFi platforms often encounter bugs or glitches which disrupt their smooth functioning. At times, such disruption can lead to losses for traders and other short term investors. For example, a glitch that leads to panic in the market may cause prices of certain cryptocurrencies, especially the platform’s native token, to fall. This article discusses the effect of a bug on Binance which resulted in a pause of spot trading for two hours.
Binance Pauses Spot trading, what happened?
On 24 March, a bug forced Binance crypto exchange to pause its spot trading service for two hours, something that created panic among its users. As such, no one would deposit, trade or withdraw from the spot trading section.
However, the crypto exchange’s CEO, Changpeng Zhao (CZ), constantly reminded its users that everything was under control and all the assets were safe. He even informed the users that the bug had affected the trailing stop.
CZ updated the users on Twitter. He said, “Initial analysis indicates the matching engine encountered a bug on a trailing stop order. Deposits & withdrawals are paused as a SOP (standard operating procedure).” He also reassured them that trading would resume within two hours.
What delayed the resumption of trading was the much time taken before identifying the nature of the glitch the exchange experienced. In fact, according to CZ, the platform identified the bug after 57 minutes. He also assured the users that the occurrence was unlikely to affect the price of cryptocurrencies.
Read also: Spot Trading VS Leveraged Token Trading
He said, “When the biggest exchange halts trading, prices won’t move much. If it moves on smaller exchanges, when Binance comes back, our deeper orderbook will bring the price back, causing those guys to lose money. Traders know this.”
As per CZ’s assurance, spot trading resumed after about two hours from the time the exchange announced the bug and pausing of spot trading. Although spot trading continued at 2.00 UTC, the exchange paused trailing stop for some more hours.
Understanding trailing stop loss
As mentioned above, trailing stop loss is an important aspect of risk management in spot trading. A trailing stop loss is a type of a stop loss order that maintains a fixed number of pips below or above a market order depending on whether it is a short trade or long trade. For example, with a long trade the stop loss moves up when the price is rising.
However, when the price goes against the market move the trailing stop loss will remain fixed. Traders can use pips or percentages when setting the stop loss, depending on what the trading platform allows.
Read also: Difference Between Perpetual Futures and Spot Trading
The effect of pausing spot trading
Changes on how a trading platform operates can lead to serious effects on the prices of cryptocurrencies. The major effect was a sudden decrease in the price of Bitcoin from $28,073 to about $27,456. However, by the time the trading was restored the value of BTC was back to $28,068.
Like BTC, the value of ETH fell by 3%, from $1,789.05 to $1,730. Nevertheless, by 2.00 UTC, when trading resumed, its value had risen to $1,765.50.
Market reaction
The general comments on Twitter show that the users were happy about how Binance handled the case. For example, an individual with a Twitter Username @ CryptoViv wrote, “@cz_binance comes out with a clarification in literally a few seconds! Unmatched Customer service honestly. This should calm a lot of folks down. Btw, no bank would do this!” This user also added that Binance handled the issue better than banks.
Spot trading at Gate.io
Many crypto exchanges including Gate.io, one of the safest Bitcoin exchanges, offer spot trading services. In fact, it is one of the easiest ways of trading cryptocurrencies as there are not many complications. Let’s illustrate how you can trade cryptocurrencies at Gate.io.
The first step to trade crypto at Gate.io is to fund your wallet. You can purchase major cryptocurrencies like USDT, ETH and BTC using credit card or wire transfer. You then transfer the cryptocurrencies you have to your spot trading account.
Next, enter the pair you want to trade in the market section as indicated in the image below.
As an instance, we have selected a USDT/BTC pair. Once you click on the pair a new window will open where you indicate the quantity of the cryptocurrency you want to buy as shown in the next diagram. In this case, we indicate how you can purchase BTC using USDT.
Therefore, you simply input the amount of BTC you want to buy. Once you have done that you click “buy btc.” The next and last step is to confirm the transaction.
Conclusion
Binance exchange had a bug on 24 March which led to the suspension of the spot trading service for two hours. After attending to the glitch, the exchange restored the trading service at 2.00 UTC. However, its trailing stop loss was not available for the next several hours. The prices of BTC and ETH fell for a short period after the suspension of trading.
