Bitcoin price dropped as low as $10,000 yesterday with the altcoins following the pursuit. The dip began on Wednesday when leading crypto exchanges like Bithumb, Binance and Coinbase experienced issues like police raids and congestion due to high network fees on Ethereum.
Investors still holding bullish sentiments are looking for reversal signs to buy the dip. According to update for data analytics firm, Coinmetrics, price quotes on Gemini are greater than other exchange pointing towards a bullish buyers inclination.
Traders on @Gemini are buying the dip pic.twitter.com/K6UbdUJG7e
— CoinMetrics.io (@coinmetrics) September 4, 2020
Just this morning, a user on Gemini noted that he was unable to withdraw Bitcoin from the exchange.
Jameson Lopp, a Bitcoin programmer presented the following theory for the withdrawal suspension. He tweeted,
Probably ran out of funds in their hot wallet and need to run over to the cold storage vault in order to re-up. Bitcoin supply held by exchanges continues to decrease.
Usually, exchanges keep multiple wallets to manage their customer’s holdings. A hot wallet is an active wallet that is used for the daily purposes of the exchange. The cold wallets which hold the majority of the exchange assets are used to manage liquidity in the hot wallets. Hence, safeguarding the funds from exchange hacks and providing timely liquidity to the hot wallets. The exodus from exchange wallets has been ongoing since April as users move their funds into self custody or other private custodians.
Gemini, being one of the leading regulated exchanges in the US seemed to have temporarily to have run out of its on-hand liquidity as traders rush to buy the dip. Nevertheless, the funding rate on derivative exchange holds towards a bearish sentiment pointing to a deeper correction around $9000.