How Bitcoin’s sudden move to $64k wreaked havoc for Coinbase

  • Coinbase outage during BTC surge led to $0 balances for users causing panic.
  • Despite FUD, Coinbase’s Layer 2 network (Base) remained resilient with growing daily transactions and active addresses.

Following substantial gains in the value of Bitcoin [BTC] on the 28th of February, several Coinbase users reported observing a perplexing situation where their account balances displayed a sudden drop to $0.

Massive problems on the network

This unexpected occurrence left users bewildered and seeking explanations for the discrepancy. The issue was highlighted when many users took to X (formerly known as Twitter) to post their wallet balances.

Source: X

The company acknowledged the issue, assuring users of the safety of their assets. Despite having modeled a 10x surge in traffic and load-tested, the actual surge following the BTC hike exceeded expectations.

Brian Armstrong, CEO of Coinbase, finally announced that the apps have recovered.

After the incident, the sentiment around Coinbase was impacted and panic and FUD ensued. This not only caused the price of Coinbase stocks to decline momentarily but according to some, even BTC was impacted by this outage.

The value of Bitcoin plummeted by $100 billion in just 15 minutes, apparently triggered by the Coinbase crash.

Between 12:15 PM ET and 12:30 PM ET, Bitcoin’s price dipped from $64,000 to $59,000, marking a nearly 9% swing. The crash coincided with numerous Coinbase users facing issues on their networks.

Notably, this sharp decline occurred when Bitcoin was on the verge of reaching a new all-time high, being less than 10% away from the milestone.


How is Base doing?

Base, the layer 2 network created by Coinbase, was not affected by the FUD. The number of daily active addresses on the network continued to grow.

At press time, the number of daily active addresses had amounted to 90,000.  In terms of transactions on the network, there was an uptick observed and the number of daily transactions grew to 406,000.

Screenshot 2024 02 29 at 12.02.01 PM.png

Source: Artemis

Additionally, in the DeFi sector, Base was doing relatively well. The TVL collected on the Layer 2 network had grown, alongside the DEX volumes on the network.

Screenshot 2024 02 29 at 12.32.30 PM.png

Source: Artemis

Next: Bitcoin wipes out millions as it pulls back after hitting $64K

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