Dew News - Coinbase GDAX Update on Ethereum Crash

in #cryptocurrency7 years ago

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So many people I know were hurt by the ETH price drop. Hopefully it won't hurt the reputation of all crypto to those who are new this space!

Very interesting situation there with GDAX and why it spiked so low. I would assume that it might be some sort of glitch in the system maybe as I don't see how the price could get all the way down to 8 cents then instantly go back up to normal. When you buy usually it fulfills the top order unless there was an error so that is all I can think of here. Also have you looked into Cryptoping, seems like an interesting ICO and price alter bot.

I think this was due to people margin-trading. Basically it means that people lend money from the exchange to buy more, in this case, ETH. But the exchange never wants to lose money, so if the price falls too low, then the exchange will start to sell the ETH to make back the money you owe.

Example:
I buy 10 ETH at 300 USD a piece. I also buy another 5 ETH using margin trading, I now have 15 ETH at 300 USD a piece, where I've borrow 5 ETH at 300 USD a piece from the exchange. So my current value is 15 x 300 = 4500 USD. But then a whale starts selling his entire position and the price plummets. In this particular scenario, if the price reaches 100 USD or below (100 * 15 = 1500 USD, which is the amount I borrow from the exchange for those extra 5 ETH) the exchange will start selling all my ETH to make back the 1500 USD I owe them. Suddenly I'm left with 0 USD and 0 ETH on my account.

What happened at GDAX seems to have been a huuuuuuge sell, I believe it filled up every buy order available, thus the price was able to be lowered incredibly fast since there was a lot on the selling side and none at the buying side. This also kicked in a ton of forced sell orders from margin-traders and simply kept going until it finally stabilised - which would be when the huge order was filled and the the buy orders had caught up again. Not really sure how the whale sold a such low prices though.

Someone correct me if I'm wrong :)

@kingofdew, I love this. This is actually very informative. The only thing I have against it is using changelly. I personally haven't used it before but word on the street is that it's not trust-worthy. Not sure why. Does anyone know?

I have not heard this before. If you dig anything up, please share. I don't want to point people there if it's a problem.

Who are these ppl with buy orders down there?!

Hello!..!

Great recap of the Ethereum market today... Great day for Status ICO, but appears to have been an early trigger for the Ethereum chaos... Promoting you in a big way! Please reciprocate by following and promoting. Thanks!

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