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Ethereum crashed from $319 to 10c on GDAX after ‘multimillion dollar’ trade
- 1123123121 9y agoIt is amusing how the "disrupters" go through all the same mistakes as stock exchanges did more than 100 years ago. But the mistakes are probably not entirely unwelcome for some of the stakeholders ...
- underyx 9y agoThe buy price did. Sell price stayed mostly unaffected.
- deleted 9y ago[deleted]
- bluejekyll 9y agoWould that imply nothing was exchanged at 10 cents?
- curiousgal 9y agohttps://stocktwits.com/jdemasie/message/86641301 https://stocktwits.com/jdemasie/message/86641301 Edit: fuck that, check this out! 7200 ETH at 0.1 USD!! https://api.gdax.com/products/eth-usd/trades?after=6326580&limit=1 https://api.gdax.com/products/eth-usd/trades?after=6326580&l...
- bluejekyll 9y agoSo the current "value" is around $300, but something fishy is going on, and the exchange is trading at $.10? This does not build confidence.
- raisedbyninjas 9y agoOne exchange had a big market sell order large enough to trigger enough margin calls and stop loss orders to create a cascade effect. It flashed to 10 cents for a few seconds. So the combination of volatility and careless traders created this situation as far as we know.
- shawabawa3 9y agoSomebody placed a huge sell-order which crashed the price. This caused stop-loss and margin calls to be triggered, adding a huge amount of market order sells, which crashed the price to effectively zero (more sell orders than buy orders on the exchange). Some lucky people (or the people who orchestrated the crash) snuck in some super low buy orders that got matched. The price had recovered within a few minutes (once all the margin calls had executed). It just goes to show the risk of trading on margin
- jandrese 9y agoIt seems likely that this was sharks taking advantage of some naive speculators. It wasn't even a lot of money for the finance world, and I bet they will made a tidy profit selling off all of that Ethereum they just bought.
- DiNovi 9y agoNo. there was a market flood so the asking price went down to 10 cents for about 2 seconds.
- kasey_junk 9y agoThat's not what the article says. It said that trades occurred at the crashed price (and that's the common definition of 'price' when covering trades)
- jstanley 9y agoHe means the resting asks did not drop that low, only the resting bids.
- kasey_junk 9y agoThe resting visible asks. Clearly if the exchange matching engine was working properly there were asks that low (in the form of stops). That's pretty typical in crashes.
- fivestar 9y agoThe Ponzi will now reel in the suckers.
- elnygren 9y agoIt takes two to tango. A lot of people lost a lof money because they got margin called at ~$2 for a commodity that is worth ~$300. https://twitter.com/elnygren/status/877660177406865408 https://twitter.com/elnygren/status/877660177406865408 On the other hand, a lot of people made a lot money since there are buy orders that wen through at less than 1% of the real price.
- deleted 9y ago[deleted]
- michalu 9y ago"commodity" :)
- captainmuon 9y agoWait, so basically I could create a buy order for $2, leave it sitting there, and wait until there is another crash [1]? If there is no crash, then nothing happens. For good measure, do it for every currency on the exchange. Is there any risk or downside to this? Seems like buying a lottery ticket for free. ---- [1] ... or someboy fat-fingers an order - although I think in that case I think still the higher bidders would win, wouldn't they?
- maxerickson 9y agoYou risk your buy going through and the price never recovering to above $2.
- yebyen 9y agoIf you bought 1000 ether at $2, you'd be out $2000. If it is a glitch and the price does recover, you've made about $340,000. (Sounds like a scenario out of a post from the sub-reddit /r/LateStageCapitalism, doesn't it!) Of course if you do this on every exchange, you multiply your risk by the number of exchanges, and your reward probably only comes out of a single one of those exchanges, unless it is the real deal "flash-crash" coin-wide permanent glitch-out end-of-the-world everything's hosed and the price is never coming back, in which case you lost $2000·N which sounds a little worse.
- problems 9y agoDon't place market orders, you will get screwed sooner or later.
- Analemma_ 9y agoEven market orders on highly liquid, perfectly well-understood things like forex can bite you in the ass; see all the levered people who got wiped out when Switzerland dropped their peg to the Euro. Stop orders on cryptocurrency are just pure idiocy.
- relix 9y agoHow is the Swiss franc gap up related to market orders?
- gricardo99 9y agoIt's not "related to", it's "illustrative of" the pitfalls of market orders. The point was that even in highly liquid markets (i.e. Swiss franc), you can have sudden gap moves and liquidity fluctuations and a market order will just match against whatever momentary, ridiculous price happens to be there. I would note however that after the SNB event many exchanges and brokers busted the trades that were done at extremely off prices.
- jdmichal 9y agoA post-gap market sell on a gap up can end up filling pre-gap buy orders. And pre-gap market buys can end up being filled by post-gap sells. So people end up selling for much less or buying for much more than expected.
- gm-conspiracy 9y agoI think you are agreeing with the parent?
- aeone 9y agoReplying to someone doesn't necessarily mean disagreeing with them.
- deleted 9y ago[deleted]
- curiousgal 9y agoHow to turn 2.0003 million dollars into 3: 1- Have 1 million dollars in ETH 2- Place a buy order at a very low price 3- Place a sell order for the 1 million dollars in ETH you own 4- Have a partner fill that sell order 5- Watch the price topple down and your order from 2 get filled
- kasey_junk 9y agoThat's not how exchanges typically work you don't get to choose who fills your order the exchange does. But you can manipulate the markets in a similar way without a collaborator. It's called running the stops and is an old technique.
- curiousgal 9y ago>That's not how exchanges typically work They do if you work inside one. Just saying that people have done way more for way less money.
- kasey_junk 9y agoYou can accuse the exchange of corruption that's a well worn technique! Or it could be that this is immergent behavior that exists in all modern exchanges and it hit a population that wasn't prepared for it because of lack of sophistication.
- alimbada 9y agoOr: 1- Someone bought ETH for a ridiculously cheap price during the presale and forgot all about it (https://etherscan.io/address/0x7d551397f79a2988b064afd0efebee802c7721bc https://etherscan.io/address/0x7d551397f79a2988b064afd0efebe...) 2- Realised two years later how much it's worth 3- Decided to cash out having no prior experience of how stock/ForEx/crypto exchanges work, i.e. they were ignorant of the consequences of dumping that much ETH on one exchange in one go 4- Which then triggered a cascade of stop losses and margin calls.
- gcb0 9y agothis is only "possible" because etherium has even less real value than btc. btc still have intrinsic value as it is traded for chinese expating money, scared Venezuelans, American weekend drug users, etc. etherium exists for the sole purpose of playing investing with btc. everyone I know who owns etherium bought after they decided to buy btc and got a price hike on their investment so they flip btc and etherium instead of btc and usd. because they see it as two things that ever goes up. ha. this is the most perfect scenario for a pump and dump. intentional or not.
- kasey_junk 9y agoEvents like this happen on currency exchanges as well. So unless you are suggesting the Swiss national currency is also not as valuable as bitcoin your hypothesis doesn't hold up.
- fivestar 9y agoWhile I somewhat empathize with all those use cases (not the drug users), especially in the totalitarian world we inhabit, I don't think a money system based on black market transactions is going to survive. Weekend drug users, indeed! Fact: Venezualans screwed themselves because they were too dumb to know that Marxism sucks. Fact: The Chinese avoid doing the hard work of reforming their nation and instead allow a faux-Marxist oligarchy to rule over them with an iron fist. See? Fix the shit and you don't need to sneak around in the back alleys. It's the same theme over and over and again with the human race. And the US isn't immune, either--we're just one financial collapse away from the same totalitarianism ourselves.
- bhaak 9y agoMargin trading is inherently risky and even more so in the cryptocurrency market. Remember the whale that hunted shorts and longs hours before the ETF rejection? If you do margin trading, you will get rekt sooner or later in this space. There's the interesting technical side to cryptocurrencies but most people underestimate the entertainment factor.
- ericfrederich 9y agoI wish they would all crash and stay crashed so GPU prices will come down again ;-)
- zer0tonin 9y agoNow most miners are using ASIC instead of GPU.
- MichaelGG 9y agoWhich ASICs are for Ethereum? A quick search says GPUs are still popular?
- iak8god 9y agoThere are no ASICs for Ethereum. It's currently impossible to get latest gen GPUs from any retailer, or for anything close to retail price on eBay, because there's a mad rush to get into Ether mining.
- dsacco 9y agoHuh? I saw several 1080s and 1080 TIs in stock at a local Microcenter in New York just two days ago. Which GPUs are specifically used for mining?
- Anderkent 9y agoRX 480 and 580 are really popular AFAIK. In fact they can go over MSRP on secondary market
- iak8god 9y ago580s (~$300 MSRP) are selling for well over $500 on eBay today.
- thinkmassive 9y ago
- codecamper 9y agoSo is there something like a limit order on ethereum? I'd like to place a $1 limit order & see if I catch anything.
- drcode 9y agoSure, most experienced people use limit orders. However, an event like this will likely not happen again for a few years, since people are adjusting their behavior now.
- tobltobs 9y agoHow can someone adjust to such behavior, apart of stopping to trade it.
- unknown_apostle 9y agoby lots of people hoping to replicate this and putting in lots of low bids that would cushion the next fall? :-)
- Anderkent 9y agoThe people who make stupid orders now have no money, whereas the people who don't kept their. Thus the market changes behaviour.
- blater 9y agoexactly the same thing happened to me with Litecoin on GDAX. They sold off my entire holdings for $0.01 - $0 after fees. At the time LTC was trading for something like $25/LTC. It took about 3 weeks to get anything but an automated response from their support team. This was the response: "After further review, this sell was due to a margin call of your margin position on the LTC/BTC order book. A series of large sell orders were placed on the LTC/BTC order book on May 21, 2017 around 1am UTC causing a large price decline which triggered a margin call of your position when your maintenance margin ratio was exceeded. The trading engine and margin call functioned as designed. The large price decline was due to the relatively low liquidity on the order book at that time." They eventually refunded the coins.... but a couple of days later removed half of the refund with no explanation. I'm out of pocket by about $1200. I'm still waiting for a response from them on that one.
- martinko 9y agoI don't see a reason why you should be refunded anything. As I understand it, you were margin long and you got margin called after someone dumped into a relatively low-liquidity market.
- if_by_whisky 9y agoIt sounds like you lost a bet.
- Anderkent 9y agoBut he was promised 10x returns! Look at this graph!
- lordlimecat 9y agoThat's OK, people investing in crypto currencies will either not see or dismiss stories like this in their pursuit of wealth.
- dsacco 9y agoWaiting for a response? You were margin called, why did they refund you anything at all? The margin call did exactly what it's supposed to: mitigate the broker's exposure to your downside risk as it increases beyond your account size.
- rajadigopula 9y agoSomeone needs to teach them the concept of accumulation & distribution phases of trading!
- rhabarba 9y agoOh, wait, Ethereum is not a reliable financial resource? Now that's a surprise.
- gwern 9y agoMeh. Flash crashes happen with big namebrand stocks too. The nice thing about flash crashes due to dumping is that they are self-punishing: whoever was dumb enough to dump that much ETH in a few seconds cost themselves a ton of money. A fool and his money are soon parted.
- DiNovi 9y agoIt was actually a cascade - the market sell brought it down to 224, but then there was a crush of margin calls and market stop loss orders, which triggered all the way down to 10 cents. Wish I was there to scoop some!
- alimbada 9y agoYep, someone who bought ETH during the pre-sale cashed out (https://etherscan.io/address/0x7d551397f79a2988b064afd0efebee802c7721bc https://etherscan.io/address/0x7d551397f79a2988b064afd0efebe...) which then triggered the cascade.
- fragsworth 9y agoThe margin calls are what pissed everyone off, and exacerbated the crash. It's even possible that the multi-million dollar trade wasn't an accident, and they put a bunch of buy orders in to hunt the margin traders.
- FeatureRush 9y agoOn reddit someone commented that this whale must have know what he was doing... So, in theory could dumping large amount of ETH could affect pricing of even larger amount enabling the whale to profit from this procedure?
- redm 9y ago"CNBC has been unable to verify the screenshot posted by DeMasie." It just shows CNBC is not ready for the crypto world. The whole point is the trade info public and distributed. There was a trade for 3809 as the screenshot shows but also other larger trades. At $.10, there was $2,592.33 in trades now worth ~$7.8M. Here are the trades in question: {"time":"2017-06-21T19:30:18.05Z","trade_id":6326580,"price":"0.10000000","size":"134.00000000","side":"buy"} > {"time":"2017-06-21T19:30:18.05Z","trade_id":6326579,"price":"0.10000000","size":"7203.30515953","side":"buy"} > {"time":"2017-06-21T19:30:18.05Z","trade_id":6326578,"price":"0.10000000","size":"801.00000000","side":"buy"} > {"time":"2017-06-21T19:30:18.05Z","trade_id":6326577,"price":"0.10000000","size":"5060.32727547","side":"buy"} > {"time":"2017-06-21T19:30:18.05Z","trade_id":6326576,"price":"0.10000000","size":"2.87731448","side":"buy"} > {"time":"2017-06-21T19:30:18.05Z","trade_id":6326575,"price":"0.10000000","size":"3809.73327491","side":"buy"} > {"time":"2017-06-21T19:30:18.05Z","trade_id":6326574,"price":"0.10000000","size":"2534.39163532","side":"buy"} > {"time":"2017-06-21T19:30:18.05Z","trade_id":6326573,"price":"0.10000000","size":"50.00000000","side":"buy"} > {"time":"2017-06-21T19:30:18.05Z","trade_id":6326572,"price":"0.10000000","size":"74.77560000","side":"buy"} > {"time":"2017-06-21T19:30:18.05Z","trade_id":6326571,"price":"0.10000000","size":"50.00000000","side":"buy"} > {"time":"2017-06-21T19:30:18.05Z","trade_id":6326570,"price":"0.12000000","size":"220.00047159","side":"buy"} > {"time":"2017-06-21T19:30:18.05Z","trade_id":6326569,"price":"0.12000000","size":"779.99952841","side":"buy"} > {"time":"2017-06-21T19:30:18.05Z","trade_id":6326568,"price":"0.12000000","size":"50.00000000","side":"buy"} > {"time":"2017-06-21T19:30:18.05Z","trade_id":6326567,"price":"0.15000000","size":"295.00000000","side":"buy"} > {"time":"2017-06-21T19:30:18.05Z","trade_id":6326566,"price":"0.15000000","size":"790.93796645","side":"buy"} > {"time":"2017-06-21T19:30:18.05Z","trade_id":6326565,"price":"0.15000000","size":"1728.30611742","side":"buy"} > {"time":"2017-06-21T19:30:18.05Z","trade_id":6326564,"price":"0.15000000","size":"480.75591613","side":"buy"} > {"time":"2017-06-21T19:30:18.05Z","trade_id":6326563,"price":"0.20000000","size":"0.20000000","side":"buy"}
- underyx 9y agoThe trades happen inside GDAX's own market (instead of Ethereum network transactions,) so they don't necessarily need to be public.
- patio11 9y agoRemember this incident the next time someone on HN kvetches about how much money HFTs make "just" for providing liquidity.
- m3kw9 9y agoIn the normal stock market, this is an action called Taking out the Stops. Market makers can know where stops are placed so they may sell some to get it to hit those prices and have stops automatically trigger
- TheSpecialist 9y agoI want nothing more than for Ethereum market to crash and then the people who bought 10+ cards have to sell them and lose money. Then people will be able to get the card for a reasonable price.