You are viewing a single comment's thread from:
RE: BREAKING NEWS: Ether Flash Crashes To A Penny / Margins Wrecked On GDAX / Coinbase Investigating
The magnitude of this crash might indicate that there are big whales out there able to initiate such an event and that that there are high frequency traders who can push the crash further to almost 100%.
Although the market did recover one can ask if some market regulation might be desirable such as circuit breakers to stop a free fall. A circuit breaker between 5-10% like in the regular stock market might be too much. But a breaker at eg 40% might be good on the mid long term.
I am not pro market regulation but there might be a day that the crypto market becomes very nervous and a major drop like this might then not recover and initiate a major collapse of all cryptocurrencies
A circuit breaker would be a start but given how fragmented the crypto scene is, there should be something. Unlike the stocks that have major markets, Crypto has dozens and dozens of exchanges with new ones coming in monthly. That creates very thin books. I know many people do not think gdax has any blame in this but I disagree. They know how thin their book is and should have systems in place that spread a market sell larger than the book across some time rather than just allow someone to dump it all at once. Unlike other markets where shares have been spread far and wide over decades, crypto has a majority in very few hands. Adding to that the fact that millions of whatever have been stolen, hacked, etc and the anonymous nature of it all, it seems mind blowing that an exchange would allow a market sell above their order book. Anyone trading on margin should know the risks but those with stops were affected as well. In gdax, the stop-limit is hidden under the "advanced" link and maybe it shouldn't be. I actually do think they have some duty to their customers, all of whom pay them fees, to make sure a malicious player is not able to manipulate their system, crash the market and buy individual's assets for pennies. Either way, sure we will see this happen again. It is unavoidable with this many exchanges operating in the same, small, space.
Nice post! And indeed the exchanges should start to implement certain controls in the future. Some countries are starting to legalize bitcoin now and the next step is probably to start regulating it. I wonder if this will only go fast enough before the market blows itself up one one day.