A sharp collapse in crypto prices spurred a surge in investor activity, overwhelming exchange capacity and causing outages.
Coinbase, Binance, Kucoin, etc. have stated that some failures have occurred due to excessive traffic. pic.twitter.com/IjZxCRqtOl
— Wu Blockchain (@WuBlockchain) May 19, 2021
Some users complained that Binance was unable to close positions in time due to the technical problems. They asked whether the exchange would deploy the SAFU fund to compensate losses.
Binance, is there gonna be an insurance fund for people liquidated by this? I literally was unable to save myself because the entire site went down.
— End (@End73270514) May 19, 2021
They failed to maintain the peg of the dollar-pegged stablecoins. Loading issues were observed on CoinMarketCap and CoinGecko.
Tether peg starting to break.
— Mike Farrell (@GalwayGlutton) May 19, 2021
Many users turned to decentralised exchanges, triggering a sharp spike in Ethereum network fees. The rout was aided by a drop of more than 50% in the price of the second-largest cryptocurrency.
Gas prices hit an all-time high around 1,500 Gwei, sharply raising costs for users interacting with the Ethereum network. At the time of writing the metric had stabilised at around 420 Gwei.
According to Blockchair, on May 19 the average transaction fee reached a new record high of $78.
Against this backdrop, Binance suspended withdrawals of ETH and ERC20 tokens for 1.5 hours.
$ETH and ERC20 withdrawals have been resumed.
Withdrawal fees have been temporarily raised to account for the current gas prices.
— Binance (@binance) May 19, 2021
The Block News Director Frank Chaparro summed up the market situation, describing such a combination of factors as a good opportunity to buy the dip.
What a time to be alive.
Stablecoins unstable
Ungodly gas fees
Cryptos and crypto stocks plunging
Billions of $ worth of liquidations
Platform outages🤝
Time to buy the dip
— Frank Chaparro (@fintechfrank) May 19, 2021
At the time of writing, cryptocurrency prices had recovered about half of the intraday losses.
Recall that, according to Arcane Research, even before the decline in the market on May 19 the cryptocurrency fear-and-greed index fell to its lowest levels since April 2020.
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