Ethereum's Flash Crash, Explained - Business Insider
The digital currency Ethereum experienced a " flash crash " on Wednesday, with the price falling from about $296 to a low of 10 cents in a matter of minutes. Almost as quickly as it collapsed, the price bounced back, and at close to 11.25 a.m. BST (6.25 a.m. ET) on Thursday, Ethereum was trading at $342.02, according to CoinDesk . The price crash appears to stem from GDAX, one of the leading Ethereum exchanges. Adam White, the vice president of GDAX, wrote in a blog post on the company's site that an unusually large sell order caused the crash. A "multimillion-dollar" sell order caused the initial price dip, but the real problem was the domino effect afterward. The initial fall triggered 800 stop losses automatic sell orders that are placed once an asset hits a certain price and margin funding liquidations, which is where investors trading with borrowed money had their positions closed to stop them losing any more money. Essentially, the large sell order created a flood of other sellers. With not enough buyers to mop up demand, the price collapsed as programmes executing the trades tried to find a price at which buyers would step in and fill the orders. Here is how the flash crash looked as it happened: Charles Hayter, the CEO and founder of the digital-currency information provider CryptoCompare, told Business Insider in an email: "Thin order books and large trades are the usual culprits in these scenarios. Liquidity that isn't unified but spread across multiple isolated pools can be vulnerable to large sell orders that drop prices rapidly. This can then trigger panic in the market. "Most likely someone with little experience was trying to exit a position and ate through all the liquidity although it could have been a fund manipulating the market by shorting Ethereum Continue reading >>
The 45-millisecond Ether Flash Crash Prompts Safeguard Effort
The 45-Millisecond Ether Flash Crash Prompts Safeguard Effort Coinbases GDAX exchange is considering using circuit breakers GDAX might also introduce incentives to lure market makers Last weeks flash crash in the ethereum digital currency prompted the venue where it happened to consider safeguards used in other markets such as stocks. Circuit breakers that would pause trading to prevent accidents from spiraling out of control and a system of incentives to lure market makers whod help keep prices from dropping too far are among the options under consideration, according to Adam White, general manager of Coinbase has consulted with the New York Stock Exchange and other experts on how to prevent flash crashes, White said, though he declined to give details. NYSE Group The crash at 3:30 p.m. New York time on June 21 drove the currency down to 10 cents from $317.81. The cause, White said, was a single $12.5 million trade -- one of the biggest ever -- placed by a customer as a market order, or a request to sell immediately. That pushed ethereum to $224.48, but the pain didnt end there. The decline triggered sell orders from traders whod requested to bail on the currency if prices fell to certain levels, and prompted GDAX to liquidate some margin trades. It all happened in just 45 milliseconds, White said in an interview. Thats when computer algorithms started buying, driving prices back up to $300 within 10 seconds, he added. This was not long, sustained, panicked selling, White said. It was a very rapid, cascading event followed by aware and intelligent programmatic traders buying. Ether fell 4.8 percent to $288.50 on Friday afternoon, according to data compiled by Coindesk.com. Preventing the next digital currency flash crash might depend on learning lessons from the stock Continue reading >>
Ethereum Crash: Why Some Coinbase Traders Lost Big | Fortune
The white hot cryptocurrency Ethereum went on a wild ride on Wednesday, plummeting from around $320 to around 10 cents in a so-called flash crash. The price soon recovered but not before some investors took a terrible bath and some others made out like bandits. Ethereum, a popular new digital currency, trades on exchanges much like its older rival bitcoin. The most widely-used exchange, Coinbase-owned GDAX , operates like a traditional stock exchange, and lets traders buy stock on margin and place so-called stop loss ordersan automated instruction to sell if the price falls below a certain point. As Adam White, the VP of GDAX, explained in a blog post , one investor placed a multi-million dollar Ethereum sell order at 12:30 p.m. on Wednesday. The size of the order caused the price of the currency, which is already volatile, to dip. Things started to go really haywire, however, as the price dip triggered a series of stop loss orders. This slippage started a cascade of approximately 800 stop loss orders and margin funding liquidations, causing ETH to temporarily trade as low as $0.10, White explained. In other words, the computers executing the stop loss orders began to sell at all costs and, so long as there was someone on the other side to match the order, the trade went througheven if the price was totally irrational, and driven only by an algorithmic frenzy. Continue reading >>
Video Of Gdax During Eth Crash To 10 Cents : Ethtrader
Welcome to /r/EthTrader , a 100% community driven sub. Here you can discuss Ethereum news, memes, investing, trading, miscellaneous market-related subjects and other relevant technology. New to Ethereum? Read our FAQ .For the discussion of tech and application development using Ethereum, go to the official sub at /r/ethereum . Read our rules before posting. If you wish to have your subreddit or website listed in our sidebar, please review our sidebar listing policy . User flairs or tokens in the ticker are not an endorsement. Please use due diligence when choosing an investment. Welcome to /r/EthTrader | Foundation Tip Jar | Rules | Policy | Public Mod Logs | News Timeline | Education | Comments You can correct innacurate link-flair assignments by typing "[AutoMod]" along with the flair name in a top-level comment, e.g. [AutoMod] DAPP-NEWS. Requires 100 comment karma and 1-month account age. If this feature doesn't work, please message the modmail . Continue reading >>
Will There Be Another Ethereum Flash Crash?
Home Cryptocurrency Ethereum Will There Be Another Ethereum Flash Crash? Will There Be Another Ethereum Flash Crash? Gaurav S. Iyer, IFC Profit Confidential 2017-06-27T07:51:35Z 2017-08-01 02:38:10 ethereum flash crash what is ethereum flash crash is ethereum trading risky ethereum 10 cents gdax exchange gdax ethereum ethereum price prediction As fear drenches the market following the Ethereum flash crash, the one question haunting every investor's mind is this: Will there be another flash crash? Cryptocurrency,Ethereum It wasnt a bad dream, dear reader. The Ethereum 10 cents posts, tweets, and videos floating around the Internet were real. The Ethereum flash crash was real. In the blink of an eye, ETH prices plunged from $320.00 to $0.10 on the GDAX exchange. Can it happen again?That is the question haunting investors in the aftermath of the flash crash. It may explain why the Ethereum price is down more than 20% since the crash. The market is drenched in fear.Heres what happened: Some idiot sold a ton of ETH tokens, which pushed prices down. The sale triggered stop-loss orders, which pushed prices down further. Every time the price moved down, new stop-loss orders were triggered. Coinbasethe owner of the GDAX exchangebungled its response to the crisis. At first, the company seemed to shrug off the problem, saying tough luck to the traders that suffered losses. Eventually, it came to its senses.We will establish a process to credit customer accounts which experienced a margin call or stop loss order executed on the GDAX ETH-USD...This process will allow affected customers to restore the value of their ETH-USD account to the equivalent value of their ETH-USD account at the moment prior to the rapid price movement.(Source: "ETH-USD Trading Update #2," The GDAX Blog, Jun Continue reading >>
Cryptocurrency Exchange To Credit Traders For Ethereum Flash Crash
Cryptocurrency exchange to credit traders for ethereum flash crash Some traders who lost money in this week's ethereum "flash crash" are going to be credited for their losses, the GDAX cryptocurrency exchange announced on Friday. The price of ethereum, the alternative digital currency to bitcoin, crashed as low as 10 cents from around $319 in about a second in trading on the GDAX on Wednesday. The exchange blamed the move on a "multimillion dollar market sell" order. In a blog post on Friday , vice president Adam White said the exchange was "confident all trades this week were executed properly, however, some customers did not receive the quality of service we strive to provide and we want to do better." Therefore, the GDAX will create a process to credit customer accounts which experienced a margin call or stop loss order as a result of that crash, he said. Those affected customers will have their ETH-USD account restored to the equivalent of the account at the moment prior to the rapid price drop. Some traders apparently lost a lot of money during the crash. On the social forum Reddit, users complained of losing large sums of money from $3,000 to $9,000. Others saw it as an opportunity to make money. However, White noted that the exchange will honor all buy orders filled during that time. "We view this as an opportunity to demonstrate our long-term commitment to our customers and belief in the future of this industry," White said. CNBC's Arjun Kharpal contributed to this report. Here's what sets Ethereum apart from its rival Bitcoin Continue reading >>
Coinbase Is Reimbursing Losses Caused By The Ethereum Flash Crash
Coinbase is reimbursing losses caused by the Ethereum flash crash Relevnt launches a publisher-centric news app Earlier this week, GDAX, the digital currency exchange run by Coinbase, experienced a flash crash in its USD Ethereum market. Within seconds the price of ETH crashed from ~$320 to as low as $0.10. While the price recovered quickly, the rapid price movement caused many traders to experience margin calls or stop loss orders, resulting in potentially severe losses. While many initially thought the flash crash was the result of nefarious work, GDAX eventually confirmed that there was no indication of wrongdoing or account takeover. Instead, the flash crash was the result of someone placing a multi-million-dollar sell order at market price, meaning ETH would change hands at whatever price bidders were currently offering until the entire order was filled no matter how much lower the price was than the current price of ETH. Filling this order caused ETH prices to instantly slip 30% to $224 which in turn caused 800 stop loss orders and margin liquidations, which further drove the price down, to as low at $0.10. Typically, someone placing a large sell order would liquidate their position over time to minimize the downward effect on price. Also, GDAX reminds users who are about to initiate large sell orders that it will cause slippage in the market, meaning this trader most likely didnt care (or didnt understand) that his trade would move the market. For anyone not familiar with trading and exchanges, a stop loss order is an order to sell stock (or cryptocurrency) when the price drops to a certain level. Its basically used as a way to cut your losses. Additionally, a margin funding liquidation is when you borrow funds to go long and bet that an asset will rise in price Continue reading >>
Heres How Traders Lost Millions In The First Ethereum Flash Crash
Heres How Traders Lost Millions in the First Ethereum Flash Crash The price of ether fell to as low as 10 cents on one exchange, and the wider cryptocurrency community is still in shock. Markets for ether, the cryptocurrency linked to the ethereum distributed computing platform, were rocked yesterday by a huge flash crash that saw prices fall from over $365 down to as low as 10 cents on one exchange before bouncing back shortly afterwardsan event that is mildly worrying for anyone concerned about cryptocurrency volatility, but has had devastating consequences for some professional traders who have seen their holdings wiped out. The crash occurred at about 3:30pm ET Thursday, when a huge sale of ether was made on the GDAX exchange, an extension of the popular Coinbase exchange and cryptocurrency wallet geared towards professional traders. According to GDAX's official statement , a single and as yet unknown actor sold millions of dollars worth of ether across a range of positions from $317 down to $224, meaning that ether was effectively trading at the lower end of this range. The consequence of this initial drop in trading value was to trigger a number of stop loss ordersmechanisms by which a trader's holdings will automatically be sold when the price dips below a certain marker. In turn, these new sales drove the price lower, triggering additional stop loss order in a cascading effect. At its lowest point, ether was trading for $0.10 per unit. The process was even more painful for the many traders who were engaged in margin trading, a feature that GDAX has only permitted on the exchange since March. In margin trading, traders are permitted to place buy and sell orders for larger sums than they have in their accounts, multiplying the potential size of both gains and los Continue reading >>
Why The Ethereum Flash Crash Isnt Surprising, And What It Means For Crypto
Why the Ethereum Flash Crash Isnt Surprising, and What It Means for Crypto by ConsenSys on June 22, 2017 53877 Omega One Update (Jun 26, 4:30 pm): In an unprecedented move, GDAX will pay out of its own company pockets to affected customers who had margin calls or stop loss orders executed. Source here. On Wednesday, the price of Ether flash-crashed by over 99.9% in less than a second on GDAX , one of the largest cryptocurrency exchanges. This was due to a multi-million dollar sell order being placed on the exchange. Because the exchange did not have enough buy orders on its books to accommodate a sell this large, the price crashed immediately from $317.81 to $224.48; this movement was enough to then trigger a wave of about 800 automatic position liquidations due to margin calls and stop-loss orders, driving the price briefly as low as $0.10, and causing GDAX to suspend trading. This is only the most recent of a series of similar events across crypto exchanges , and rather than being a reflection on GDAX in particular, its a symptom of the underlying problems created by the stress of capital flow increasing faster than market infrastructure development. Although the price quickly returned back above $300, the millions of dollars that investors lost due to forced selling of their positions will not be recovered. This incident highlights the relative immaturity of the cryptocurrency trading ecosystem, which has been stressed by a 20x increase in daily trading volume since the start of 2017 without any fundamental change in market structures. From the trader-in-questions side (assuming they were simply trying to get out of this position in a crude way and not a malicious actor or market manipulator) dumping the whole position at once will have likely incurred millions in l Continue reading >>
4 Lessons I Learned From The Ethereum Flash Crash
4 Lessons I Learned from the Ethereum Flash Crash Posted by Jol Valenzuela | Jun 28, 2017 | Opinion | Over the weekend we had a fun market crash in cryptocurrency, precipitated by Ethereum causing a domino effect. Its easy to watch the crash and write it off as a random act to dismiss and move on. However I think there are a few important things we can learn about the state of the cryptocurrency industry from this whole episode. The biggest no duh of the list, I know, but its important to remind especially new investors of the stage were in at this particular moment. Why is X coin pumping right now? Sometimes there doesnt have to be a reason. Why is the market crashing? Could be something as silly as a fake news story about a prominent developer being killed in a car accident. Or it could be because some whale just decided they wanted to sell. Real development news takes a back seat in importance to the ICO or drama du jour. 2: Cryptocurrency is entirely too speculative Blockchain technology promises to use innovations to solve a good chunk of the worlds problems, but lets remember that, right now, most of that is still just promise. Yes, much of the tech is actually ready for use right now, but how much of this use is being fulfilled? At this stage in the industrys development, market valuations make it difficult to distinguish between vaporware and coins with large development teams being relied on for day-to-day commerce. Its mostly gambling on future potential for the moment. 3: Bitcoin still has a commanding lead in non-speculative use With market share and use cases slipping, weve seen the heralding of the Flippening and an end to Bitcoins dominance. Not so fast. Sure, the trend to a flippening of sorts is real, but its a ways away. Far and away, most services ti Continue reading >>
Buyers Beware: Lessons From The Ethereum 'flash Crash'
Buyers beware: Lessons from the ethereum 'flash crash' The price of the digital currency ethereum briefly dropped from more than $300 to 10 cents on Wednesday on one exchange. The "flash crash" shows how the young infrastructure isn't yet able to handle large trades. Big Wall Street firms have increased their interest in digital currencies and their underlying blockchain technology. One event this week shows why digital currency markets still have a long way to go before they're safe enough for large-scale trading. On Wednesday afternoon, a "multimillion dollar" sell order was placed on the GDAX exchange for the digital currency ethereum. That triggered a chain of events that resulted in ethereum briefly plunging to 10 cents on the exchange, according to a blog post by the exchange's vice president, Adam White. Stop-loss orders baked-in directives to sell an asset once it falls to a certain price contributed to the temporary drop. The same issue contributed to the May 2010 flash crash that sent the Dow Jones industrial average plunging nearly 1,000 points only to recover minutes later. Since then, the U.S. Securities and Exchange Commission approved a "limit up and limit down" mechanism to halt stocks after sudden moves of more than 5 percent. "What we've been doing in the stock market to prevent flash crashes, they're nowhere near that in the cryptocurrency market," said Joe Saluzzi, co-founder of Themis Trading and co-author of "Broken Markets," a 2012 book criticizing the way regulators have allowed high-frequency traders to take unfair advantage of markets. "You have a big market that has no confidence now," Saluzzi said. "How are you going to attract sizeable investors?" Wall Street has paid increasing attention to digital currencies like bitcoin and ethereum, tha Continue reading >>
Ethereums Flash Crash Shows Hazards Of Trading Cryptocurrencies
Ethereums Flash Crash Shows Hazards of Trading Cryptocurrencies Digital-currency exchanges don't have circuit breakers or closing bells and they don't reverse trades. This is what a really free market looks like. Ether, the digital currency used on the Ethereum platform, experienced a surge in trading that led to debilitating bottlenecks and a flash crash on Wednesday, with one exchange seeing trades as low as 10 cents for an asset that was trading above $300 just minutes before.  North Korea Leader Prepared to Discuss Denuclearization
Did Margin Trading Cause That Huge Ethereum Flash Crash In June?
Did Margin Trading Cause That Huge Ethereum Flash Crash in June? By Nathan Reiff | October 6, 2017 1:45 PM EDT On June 21, in the midst of a months-long and incredible rise in value , ethereum, the world's second-largest cryptocurrency according to market cap, fell from $317.81 per token to just 10 cents in mere milliseconds. An article by Bloomberg suggests that the Commodity Futures Trading Commission is investigating the popular digital currency exchange Coinbase about the incident. In the wake of the crash, ethereum recovered its price incredibly quickly. In fact, it climbed by about $300 per token in just a few seconds. What was behind the price plunge? And why might Coinbase know something about it? According to a report by Bitcoin.com , the CFTC has concerns that leveraged or margin trading may have caused the quick price drop for ethereum. Margin trading is a popular investment technique allowing investors to borrow money in order to complete a trade. In the aftermath of the crash, Coinbase did away with their margin trading service for cryptocurrencies, and regulators took note. That Coinbase was singled out for investigation does not necessarily mean that the exchange was directly (or even indirectly) involved in the price crash, nor does it mean that any exchange had control over that crash. However, the timing of the crash relative to the removal of margin trading as an option via Coinbase's interface may have suggested a possible connection to regulators with the CFTC. More generally, though, the agency is giving cryptocurrency exchanges a closer look now than ever before . There are many reasons for this: cryptocurrencies have been proliferating and growing in value at an outlandish rate this year, and some exchanges, including Coinbase, are processing bi Continue reading >>
This Ethereum Flash Crash Shows How Cryptocurrency Markets Are Super Risky
This Ethereum flash crash shows how cryptocurrency markets are super risky Ethereum is rebounding, but not after a dramatic crash. The cryptocurrency market for Ethereum plummeted late Wednesday. This wasn't a quick dip, but a flash crash that sent the price from $317 to a low of $0.10 in a matter of seconds. Some people saw thousands of dollars in value disappear. Things are back to normal, sort of. The price of ether, the cryptocurrency of the suddenly hot Ethereum platform, has since rebounded and is trading back at about $318. The crash, however, remains as a big reminder that this is a volatile, new market. Plenty of people have made small fortunes investing in these markets, but the get-rich-quick stories belie the risks that the average person faces if they want to get in on these new digital currencies. The vice president of GDAX, the Ethereum exchange which experienced the crash, blogged about the event , explaining that a "multimillion dollar market sell" was placed midday Wednesday. This triggered prices to fall from about $317 to $224 and 800 automatic stop loss orders to go throughthose are automatic sells set for when prices hit a certain amount. Hence some people who didn't even mean to sell ended up dumping their ether for a small percentage of what it had just been worth. "We understand this event can be frustrating for our customers," VP Adam White wrote. Things went down fast. The trading price of ether dropped 99 percent in a second, but then rose back up, with traders who held onto their holdings coming out just fine. I'm not worried, but this #ethereum chart is definitely 1 for the history books. 1 day you're kids will be studying it in their #Crypto101 ! pic.twitter.com/jU2lO6Fzwz Learn Cryptocurrency (@investor_crypto) June 22, 2017 How many of Continue reading >>
What Caused The Ethereum Flash Crash?
No indication of wrongdoing, exchange says It was a rough day for traders of the worlds second-largest cryptocurrency on Wednesday as ethereum plunged from more than $317 to briefly trade as low as 10 cents in a flash cash on the GDAX exchange before rebounding. In a post, GDAX Vice President Adam White said a multimillion-dollar market sell order was placed on GDAXs ETH-USD [ethereum-U.S. dollar] order book, which resulted in orders being filled from $317.81 to $224.48for a slippage of 29.4%. That, in turn, began a cascade of around 800 stop-loss orders and margin-funding liquidations, which sent the price temporarily as low as a dime, he explained. A stop-loss order requires the security to be sold when the price hits a certain threshold. Margin-funding refers to trading with borrowed money. Liquidations can occur when margin-funded positions are closed out automatically to prevent further losses. The combination of stop-loss orders and margin liquidations contributed to the sharp downward spiral, which was followed by a sharp rebound. White said the GDAX decided to temporarily halt trading of ETH-USD in response to the price movement, then restored trading in accordance with the exchanges downtime process once it was confirmed that all systems were operating correctly. White said the exchanges initial investigations showed no indication of wrongdoing or account takeovers but acknowledged that such an event can be frustrating for our customers. White said the exchanges matching engine operated as intended throughout this event and that trading with advanced features like margin always carries inherent risk. And dont look for the trades to be reversed. We are continuing to conduct a thorough investigation and will keep customers updated with any resulting actions. Wit Continue reading >>