Those Crazy Cryptos – Ethereum Price Flash Crash

Yes, those crazy cryptos are at it again.

Just when you think they couldn’t get any more volatile, boom, a flash crash!

Crypto darling ethereum crashed from US$319 to as low as 10c in about one second on the GDAX cryptocurrency exchange yesterday.

Apparently a large multimillion dollar sell order went through, and inadvertently triggered a cascading process of stop losses.

Some people suspect market manipulation or other ulterior motives, but GDAX has denied this.

The trades are being listed as final and will stand as correct.

Just to point out, the ethereum price did shoot back up and is now sitting at US$312 as I type this.

In fact, rumours are circulating that one lucky punter had a very optimistic buy order of 3,800 ethereum at 10c fulfilled.

If true, he or she has just turned $380 into over $1 million!

And I bet he thought he had missed the boat…

But it’s not so good for ethereum. It’s yet another warning bell that perhaps this currency has risen too fast, too soon.

Growing pains for cryptocurrencies

To make matters worse, this has happened at a time when the ethereum system seems to be slowing down thanks to a slew of new ICO’s (Initial Coin Offering’s) being launched.

A lot of these ICOs are built on ethereum.

In fact, this is the main reason for ethereums stellar rise from US9 to $312 in under six months.

A list of exchanges including Bitfinex, BTC-e, and Shapeshift have all announced pauses or service disruptions in trading ethereum.

Scalability is the one issue that a lot of cryptos, from bitcoin to ethereum are struggling with.

How it’s all playing out is a very fluid situation.

Bitcoin Boom: How You Could Turn Every $500 You Lay Down into a $10,000 Cryptocurrency Fortune…find out here 

The takeaway

This is a very immature market, with a lot of uncertainty and risk.

It is not a place to invest for the fainthearted.

And you certainly aren’t going put a big chunk of your net wealth in…yet.

But let’s not forget that we’ve seen flash crashes in mature markets too.

In 2010, the New York Stock Exchange dropped 1,000 points before rising again to its previous value, all in the space of 15 minutes.

And recently the euro dropped 20% against the Swiss franc in the space of one minute. A gigantic move in such a massive and liquid market.

A couple of major forex brokers went bankrupt soon after.

This is nothing confined just to the crypto sector.

And the upside returns for those that start to educate themselves on what this sector is all about could be fantastic.

Once you start to get beyond the ‘shock’ headlines and understand the deep benefits that each crypto asset can potentially provide, it does change your thinking.

I find the best way to learn, is to dip your toe in. And start learning as much as you can.

I guarantee you will be well ahead of the curve if you can start to educate yourself on even just one or two of these crypto currencies.

In fact a HSBC survey published today said 59% of US consumers did not know what a blockchain was.

And when you do, you never know, you might get hooked on them like me.


Ryan Dinse,
Analyst, Money Morning / Markets & Money

Bitcoin Boom: How You Could Turn Every $500 You Lay Down into a $10,000 Cryptocurrency Fortune…find out here 


Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

Ryan's premium publications include:

Money Morning Australia