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Today, the price of Ethereum has dropped temporarily to $ 13 on GDAX, a high-performance trading platform operated by Coinbase.
According to the former forex trader and cryptocurrency analyst Cole Garner, low orders in the range of $ 13 to $ 60 were actually filled on the platform. Garner has posted screens of GDAX that showed orders successfully archived at $ 55 and $ 65.
As of December 7, the price of Ethereum (ETH) remains at $ 85 and at the lowest point of the day, ETH dropped to $ 83. At $ 55 and $ 65, Garner was able to purchase ETH at a 36 percent lower rate than the current ETH price.
What caused the flash crash?
Most flash arrests occur due to incorrect or poorly processed exchange orders at low prices. On exchanges, investors can easily make a mistake by entering a wrong figure for a purchase or a sales order.
For example, a potential purchaser of Ethereum may have wished to present a purchase order of $ 13 to purchase the digital asset at the lowest possible level of support, but engaged in a careless mistake and filed a sales order for $ 13.
It is quite possible that a single trader intends to present a purchase order at $ 13, with a high level of support between $ 13 and $ 14, as several technical analysts have suggested during the last week, and mistakenly filed a low-level sales order.
Even in major stock markets like New York Stock Exchange (NYSE) and Nasdaq, flash crashes occur fairly regularly and since algorithms and bot trading dominate most markets, technical problems can not be avoided.
As Investopedia explained:
"As securities trading has become a more heavily computerized IT industry driven by complex algorithms on global networks, the propensity for errors, errors and even flash crashes has increased, and with that, global exchanges such as the New York Stock Exchange, the Nasdaq and the CME have put in place stronger security measures and mechanisms to prevent them and the huge losses they can get in. They can not eliminate them altogether, but they have been able to mitigate the damage they can cause. "
The sudden collapse of Ethereum at $ 13 was a flash accident because such a movement did not occur in other markets like Europe and South Korea, and the ETH-to-USD Coinbase market recovered almost instantly after the accident initial.
Previous Flash Crash
In June, Coinbase experienced an abnormal flash crash on its platform with Ethereum. Similarly to the flash crash that occurred on December 7th, at the moment, the price of Eth was temporarily declined from $ 322 to $ 0.1.
Given the discrepancy between the average price and the price reached during the flash crash, Coinbase has decided to repay traders affected by it.
"We will establish a process to credit the accounts of customers who have received a margin or stop-loss claim on the GDAX ETH-USD order book as a direct result of the rapid price movement at 12.30 pm PT on 21 June 2017. This process allows customers interested in reporting the value of their ETH-USD account to the equivalent value of their ETH-USD account prior to the rapid price movement, "said Coinbase on June 26th.
It is not clear if Coinbase will reimburse traders who have lost the flash crash, but if the company finds that an error on the side of the user led to the flash crash, it is likely that the refunds will not be made.
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