Between 20th tuesday and 21th wednesday, the Ethereum price dove from $319 to 10 cents then rebounded on the GDAX Stock Exchange.
The main reason was because of a multimillion dollar market sell order. The sell order was organised in a range between $317,81 to $224,48.
The second reason was other stop loss have been activated while the price was plummeting, making the price diving deeper (and making lose a lot of traders) ... Just like a vicious circle.
Apparently someone succeeded to make a million from that situation by activating a buy order of 3800 ethereums if the price was 10 cents on the GDAX. This looks like manipulating the market, but we won't really know what was the motivation of this huge sell order.
We know that the cryptocurrency world is made of high risk with high reward. This example is one among a lot. To my opinion:
- we should know that we don't need capital invested in cryptocurrencies (actually I told to myself that my capital is already lost).
- don't be a trader ! Be an investor ! We shouldn't panic and should keep our positions for long term. No need to sell because the cryptocurrency plummeted of 50% or rose of 100%. We need to wait for the moon !
Tell me your thoughts in the comments ! According to you, is it a manipulation of the market ? Do you still trust the cryptocurrencies system ?
This fall was not a good sign. For me is a sign that the market is still not stable, whether it was a hacked or a sale of a big fish
Yeah there's a lot of traders speculating on the market. I'm not sure the market will be stable (just like other stock exchange markets by the way ...) but there will be a global increasing trend to my opinion ...
That's why I think this is a hack.. If there were no huge limit buy orders all the way down to 10ç I wouldn't have suspected foul play. But the fact that they existed, when no one would normally place such limit orders at such low prices in a market hovering around $320, means someone knew that such a thing could happen. I think the market maker who placed the multimillion sell order is the one who made majority of the purchases at low prices from various stops activated on the way down. And they probably kept buying until the trading was stopped.
The fact is that blockchain and cryptocurrency is all still at infancy stages, and it still is work in progress no matter how much they've done already. It still is very fragile. The DAO hack on Ethereum last year is just a case where technically no one did anything illegal, and the smart contract technically executed as it was supposed to. It was just that people didn't read the details of how it would work, and almost $60m were snapped!
Ahah very good explanation ! Maybe one of the reasons there is no huge limit buy orders is because there are no lot of actors currently on cryptocurrencies. You're right this is still at fancy stages and we still need to wait for the cryptocurrencies world to get better ...