Why Bitcoin exchanges are halting deposits and withdrawals

Bitcoin is a virtual currency that Satoshi Nakamoto created in 2009 as a response to the 2008-2009 financial crises. This digital money is a perfect alternative to fiat currencies because it offers a lot of conveniences that traditional currencies don’t. This digital money has turned a few individuals into billionaires despite being volatile. Therefore, you can trade, take or lend this digital money to earn an income. Mining is another venture you can engage in and make a considerable income from this virtual currency. Either way, Bitcoin exchange platforms were created for trading and purchasing this electronic money. However, you can rely on genuine exchanges like https://bitcoin-up.live/ and be sure that your investments are safe and you cannot lose them.

While trading this digital money, you will be required to own a wallet that safely stores your digital assets. However, lately, Bitcoin exchanges have begun halting withdrawals and deposits, an idea that does not sit well with this electronic money investors. For instance, in July 2022, Binance, a Bitcoin exchange, paused digital money withdrawals claiming that there was network congestion. Celsius Network, a lending platform, also did the same and halted all withdrawals.

However, most industry experts have noted that these digital money exchanges are halting their withdrawals and deposits because they are running out of liquidity. Moreover, crypto exchanges do not have liquid cash that they hold in their digital wallets on behalf of their investors. So, since these digital money exchanges cannot liquidate Bitcoin holdings even at their decreased values, they are trapped and hence in a challenging position.

More so, if investors want to withdraw all their Bitcoin investments all at once, their system gets affected, which is why they halt withdrawal and deposits. In addition, currently, these exchanges only have 2 million Bitcoins since 19 million are already in circulation, which means they are running dry. 

What Investors Should Do If an Exchange Halts Withdrawals and Deposits?

In such cases where exchanges are in a challenging situation hence halting withdrawals and deposits, they may suffer from bankruptcy. As a result, these digital money investors will suffer from losses. On the contrary, when crypto exchanges halt their activities, it does not mean that the Bitcoin era has ended. However, education in Tokenomics and proper regulation are required to protect investors. 

In June 2022, this digital currency, the most popular and highest traded cryptocurrency, hit a new low. Since then, the value of this digital money has been demeaned and is at $ 22,000. As a result of this volatility, platforms start blocking withdrawals and volatility as a last-minute effort to find a creditor to cover collateral. During such situations, investors should not worry about losing their investments since it is not allowed. Since July of 2022, these digital money investors have been worried about losing their assets due to the high number of these digital money liquidations. 

Moreover, this digital money market has been under pressure from the US Federal Reserve, which has increased interest rates to fight inflation over the past few months. As a result, it is safe to say that a few factors force these exchanges to block withdrawals and deposits, but investors should not be worried about losing their investments. 

The Bottom Line

Every digital money investor relies on exchanges to help them trade and purchase this digital currency. As a result, when an exchange halts its withdrawals and deposits, it can be highly depressing. So, get a reliable crypto exchange that you are sure won’t lose your investments in the end.