
Ethereum crashed from $319 to 10c on GDAX after ‘multimillion dollar’ trade - mw6621
http://www.cnbc.com/2017/06/22/ethereum-price-crash-10-cents-gdax-exchange-after-multimillion-dollar-trade.html
======
elnygren
It 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.

~~~
captainmuon
Wait, 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?

~~~
headcanon
The downside is that when you put in a limit buy the exchange puts your money
into escrow until the order is cancelled or filled. Since a crash like that is
unlikely to happen (first time on that exchange I believe) it just means you
have money tied up when it could be put to better use

~~~
unknown_apostle
"unlikely"

Complexity fattens the tail. Ethereum must be one of the most complex things
out there.

It's been live for 1 year on GDAX and then it went for a 3000x round trip.
What does that tell you about odds?

~~~
lordlimecat
It tells me that its a terrible investment decision and that I am better off
at the blackjack table. At least casinos are regulated.

------
blater
_exactly_ 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.

~~~
piaste
> They sold off my entire holdings for $0.01 - $0 after fees.

Why did you have such an order? I can understand a stop loss order at some
small percentage of the original purchase price, because you still get
something, but one that says "if this currency suddenly becomes worthless,
give it away for $0.01" doesn't make any sense.

~~~
abandonliberty
Sounds like a stop order without the limit.

[https://en.wikipedia.org/wiki/Order_(exchange)#Stop_order](https://en.wikipedia.org/wiki/Order_\(exchange\)#Stop_order)

>When the stop price is reached, a stop order becomes a market order.

Market value was extremely low due to low liquidity.

This is a risk with stop orders that many investors aren't familiar with.

------
ericfrederich
I wish they would all crash and stay crashed so GPU prices will come down
again ;-)

~~~
zer0tonin
Now most miners are using ASIC instead of GPU.

~~~
MichaelGG
Which ASICs are for Ethereum? A quick search says GPUs are still popular?

~~~
iak8god
There 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.

~~~
lordlimecat
My recollection of how Bitcoin turned out indicates that most of those people
will not make money. That, in fact, the simple rules of how markets work mean
that most _cannot_ make money, on several counts:

* Those with resources will have an edge, and will buy an optimal number of GPUs to get return before the price is driven down

* Anyone without resources will not be able to mine quickly enough to get a return before the price is driven down

* If the market were still lucrative, the GPU makers would not be selling all of their stock, which means it is a near certainty that either the GPU makers or someone with connections has already snapped up a healthy share

* Worse, the more lucrative it is, the more quickly ASIC makers will release ASICs which make those GPU investments all but worthless for mining.

All of this means that anyone contemplating whether they should get into
mining already has their answer: "no".

~~~
iak8god
> All of this means that anyone contemplating whether they should get into
> mining already has their answer: "no".

That certainly seems to be the consensus on the mining forums I'm following.
/r/EtherMining is now inundated with people who lack the very basic skills
needed to assemble a computer and run mining software, but are attracted to
the prospect of free money. Many of those people also lack the ability to do
basic arithmetic and the sense to realize that the only way they will turn a
profit is if the USD value of ETH rises sharply -- and that _if_ that happens
they'd be better off in any case just buying ETH now instead of blowing $2000
- 3000 on equipment.

~~~
SubiculumCode
Curious. Is it at the point where the money earned is less than the cost of
electricity, like bitcoin approached?

------
patio11
Remember this incident the next time someone on HN kvetches about how much
money HFTs make "just" for providing liquidity.

------
bhaak
Margin 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.

------
curiousgal
How 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
That'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
>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
You 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.

------
underyx
The buy price did. Sell price stayed mostly unaffected.

~~~
bluejekyll
Would that imply nothing was exchanged at 10 cents?

~~~
curiousgal
[https://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&l...](https://api.gdax.com/products/eth-
usd/trades?after=6326580&limit=1)

~~~
bluejekyll
So the current "value" is around $300, but something fishy is going on, and
the exchange is trading at $.10?

This does not build confidence.

~~~
shawabawa3
Somebody 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
It 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.

------
problems
Don't place market orders, you will get screwed sooner or later.

~~~
Analemma_
Even 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.

~~~
lbotos
I'm not following why stop orders on Crypto are idiocy?

~~~
clarkmoody
GP probably means stop -> market orders. When the stop price is reached, the
order converts to market.

Various brokers and exchanges offer more types of stop orders, such as stop ->
limit, where you set a limit price, and your order becomes a limit order after
the stop price is reached.

Of course crypto exchanges take forever to implement new order types, and I'm
not sure any of them have stop -> limit.

Also, stop orders don't work in general in a slipping market because liquidity
vanishes from the book.

~~~
danmaz74
Don't know about the other ones, but the biggest exchange for alts, poloniex,
has stop-limit.

------
gwern
Meh. 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
It 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
Yep, someone who bought ETH during the pre-sale cashed out
([https://etherscan.io/address/0x7d551397f79a2988b064afd0efebe...](https://etherscan.io/address/0x7d551397f79a2988b064afd0efebee802c7721bc))
which then triggered the cascade.

~~~
samkxu
Please stop spreading this misinformation. If you look at the transaction, the
only thing that happened was using the safe split contract which essentially
gives the owner equivalent ETC.

------
rajadigopula
Someone needs to teach them the concept of accumulation & distribution phases
of trading!

------
codecamper
So is there something like a limit order on ethereum? I'd like to place a $1
limit order & see if I catch anything.

~~~
drcode
Sure, 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
How can someone adjust to such behavior, apart of stopping to trade it.

~~~
Anderkent
The people who make stupid orders now have no money, whereas the people who
don't kept their. Thus the market changes behaviour.

------
rhabarba
Oh, wait, Ethereum is not a reliable financial resource? Now that's a
surprise.

------
m3kw9
In 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
I 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.

------
redm
"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
The trades happen inside GDAX's own market (instead of Ethereum network
transactions,) so they don't necessarily need to be public.

~~~
redm
As posted, the trade data was available, I got it yesterday after this
occurred.

~~~
underyx
I know, but they don't necessarily need to be public.

------
gcb0
this 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.

~~~
shawabawa3
ethereum has 70% of the market cap of bitcoin.

it's worth more than bitcoin was worth ~3 months ago

~~~
beberlei
market cap is worthless when we talk about fiat currency.

~~~
shawabawa3
but ethereum/bitcoin aren't fiat currencies?

market cap is useful in that it shows the total value of the coin. Comparing
the price of 1BTC to 1ETH doesn't make sense, but comparing their market cap
does

~~~
beberlei
Well they have no intrinsic value like gold. And the code could be considered
a legal framework that acts as a contract for how BTC/ETC are valued.

~~~
wcarron
Well gold also has little intrinsic value. Of course, it has uses like in the
manufacture of technology, but most gold is used for making useless shit into
shiny useless shit. Crypto has uses, too though. Such as facilitating
payments, DLT, etc.

All value is assigned. So, what then, besides traditional consensus, makes
gold 'intrinsically valuable' without also making cryptocurrencies
intrinsically valuable?

