Some of you may have noticed the price drop for Ethereum on GDAX earlier today. It happened at around 3:30 PM EDT. Piecing together information after the fact, it looks like one seller sold 13,000 ETH (or more) at market price which ate up every single BUY order in the book.
That on its own is crazy enough. Someone was willing to spend what was priced around $4 million to crash the price and create panic in the market leaving nothing but sell orders remaining and causing another rapid sell off. GDAX has since been taken down with the following message from their support team:
We're currently investigating sign in issues on GDAX.com, as well as the cause of rapid price movement on the ETH-USD order book.
It remains to be seen what will happen after trading resumes or if Coinbase will do anything to try to remedy the situation. There were also a bunch of buy orders with some as low as $0.10 that were filled. Someone was able to purchase 11,000 ETH for $1,100 that is now worth over $3 million.
Some people have speculated that this was an ICO company selling off their ETH or a whale trying to manipulate the market to get more ETH for themselves, but I remain skeptical. A company with large holdings in ETH would be very careful about how and when they cash it out to USD. Dropping it all at once creates mass panic, and would be bad for the market in general. Sure, they could be a scam ICO company that plans to just take the money and run, but I find that unlikely. A whale is more likely, but they also benefit from not scaring people away from the market. If everyone else sells because they are scared then they stand to lose money too.
So that brings me to my theory. It is a bit out there, I will admit. I think there are large banks that are involved in crypto currencies for the sole purpose of trying to scare people from investing. Who has the most to lose from people investing their money in crypto currencies? Big banks. I suspect they have played a role in the market bubble that we have experienced in the last couple months and some of the mass selloffs we have seen. They are terrified of another financial recession and people moving their money to crypto currencies. The $0.10 buy orders could have been a way to kill two birds with one stone. Make a large profit, and scare people away from crypto currencies.
I posted a similar theory on reddit in the ethtrader daily discussion, but it seems to have gotten removed without any notification which I find very suspicious.
Anyway I came here to share it without risk of it being censored. I love a good conspiracy theory. Curious what everyone else thinks while we wait for this story to play out…
UPDATE Coinbase/GDAX resumed trading at around 7PM EDT and the price rebounded a bit
UPDATE 2 Some people suspect that the sell order was originally sent over from this wallet:
https://etherscan.io/address/0x7d551397f79a2988b064afd0efebee802c7721bc
UPDATE 3 Coinbase has responded. See my follow-up here
flash crashes are a common method used on the manipulated stock exchanges worldwide,it wouldn't surprise me in the least if what your saying is true, sell off high, then buy back minutes later making a fortune, but it is the little man who suffers...... ring any bells !!!!
The big boys are entering the game.
Yes. It does worry me in general how volatile the market is and how easily manipulated it can be. It is also magnified because a lot of people are investing out of greed without really understanding what Ethereum is or how the technology can be used. These same people are the ones who are most likely to scurry away as soon as they fear the market will crash.
So that's why you see those buy orders of 0.0000001 on some of these coins :-)
Might be a good idea to try out !
always worth sticking a really low order in and just leaving it in place just in case, i'm definitely giving it a go !!
Why not :-)
This could have been manipulation, but I think the most likely explanation is trading ignorance. I've seen it so many times where people just bail with a market order. There's money to be made by training people how to effectively use limit orders.
I certainly think it is possible, but the thing is, if you have over 13,000 ETH (worth nearly $4 million), I think it is more likely that you are experienced and know what you are doing. A newbie trader is unlikely to have that much, but it is possible.
Yeah, I did have that thought as well. Maybe it was just a flub. The problem with the manipulation argument though is that it's costly. Having once worked for a big bank, I highly doubt anyone would get the green light to spend a few million doing this.
That is a very good point. I hadn’t really considered that, but it is still possible. I definitely am drawn to conspiracy theories. If you stand to lose far more than $4 million by people moving their money into crypto currencies then it could be considered a calculated gamble.
The crypto market had been growing by billions of dollars a day up until the last few days. Probably a large part of that is coming out of the same big banks.
I know it is a bit of a stretch, and I did mention that. If someone did plan on buying out the entire order book in order to win back the ETH they spent for a fraction of the cost then I think they knew exactly what they were doing.
There is NO asset safe from these criminals! Nice write up! Followed.
Thanks, followed back!
thank you for sharing
mmm.. i have Ethereum...
No problem. I am new here. Just getting familiar with the platform. I would say your best bet is to HODL
You said " Someone was able to purchase 11,000 ETH for $1,100 that is now worth over $3 million."
Is that one particular wallet? Where were you able to get this information?
Thanks!