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At the beginning of today, the price of Ethereum [ETH], the third largest cryptocurrency by market capitalization has momentarily fallen to $ 13 on the GDAX cryptocurrency exchange. GDAX is a high performance trading platform managed by Coinbase.
In technical terms, this event is referred to as an abnormal flash arrest. Some platform traders have reported that they have filled their orders 30-40% less than the current price of $ 85. One of these traders is the former forex trader and cryptocurrency analyst Cole Garner, who published on Twitter test of his full orders in the intervals of $ 50-70.
His two orders were filled in prices of $ 55 and $ 65. Another Twitter user name trader Fahad Ahmad (@lunxuk) posted an answer to Garner's tweet that showed orders up to $ 12.87.
According to Coinmarketcap, the price of Ethereum is currently $ 86, while the lowest today has been $ 83.63, with a fall of ~ 15% in the last 24 hours. Flash crashes are highly irregular but are a normal occurrence especially in highly automated financial markets.
It is difficult to identify the cause of the flash ether crash, but more often than not, such an event is the result of an error. Errors can occur in typing errors and incorrect sales orders at extremely low prices. A plausible event could be that a trader may have intended to buy ether at the $ 13-60 level as the market is highly volatile at the moment and is likely to benefit from a price fall.
However, instead of making a purchase order, it may have erroneously placed a sales order at those levels that triggered the purchase orders of other operators who had already placed limited orders for this price level.
This event qualifies as an abnormal crash of the flash because the price has momentarily decreased and the price drop has been found only in a cryptocurrency exchange. However, this is not the first time that a flash crash occurs on a Coinbase platform. Back in June of this year, the price of Ethereum dropped momentarily from the price levels of $ 320 to just $ 0.10 and quickly rebounded.
This flash incident led to losses for some traders. Coinbase opted to repay these merchants. However, it is still unclear whether Coinbase will repeat the reimbursement for today's crash flash incident.
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