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Can we stop using the word "currency" with these things? They are trading sardines.

https://www.thestreet.com/story/11064384/1/kass-trade-the-ra...

This title is extremely misleading. There was no "epic glitch", just a market crash that this trader took advantage of.
This describes most freeCodeCamp articles. They tend to use click-baity titles.
It wasn't a glitch - the system was functioning exactly as designed. Yes, GDAX should have had a circuit breaker implemented (and I expect they'll do so shortly), but lots of people were foolishly doing margin trading.

This story happened more than a week ago, and GDAX has since (at great cost) decided to refund all those who lost money due to margin calls or stop loss orders: https://blog.gdax.com/eth-usd-trading-update-2-216a3b946ef6

Hopefully this will serve as an important lesson on the risks of margin trading, and encourage all exchanges to implement circuit breakers.

Why should they stop trading because the price is falling? With multiple exchanges it doesn't make sense, if there was a huge fall in price across all exchanges and some stopped and others didn't then what?
Because all mature exchanges have price limits. Even when stock is traded on multiple exchanges.

Sometimes these limits are 1/2x and 2x of average/opening/auction price, sometimes are very tight. Some exchanges stop trading given security for the day, others are recalculating these limits in almost real time and stop for a couple of minutes max.

All these safeguards are there for a reason. And some site positioning themselves as “exchange” and not reversing/pausing (or at least ivestigating) tells only about their maturity.

Why should they stop trading because the price is falling?

If Ethereum grows a few orders of magnitude, then they should probably stop trading the same reason the stock market does.

This is the same flash crash that was reported last month, not a new one.
It doesn't say anything about whether or not the trader sold it back and converted it to USD/another fiat currency through an exchange. It stands to reason that if the trader were to launch that sell order, it would probably tank the market in the very same way that the whole thing started.
> it would probably tank the market in the very same way that the whole thing started.

...allowing them to take advantage for a second time, possibly?

Eh, you could've said the same about BTC in the early days. Nowadays $1M barely moves the market.
Given knowledge of the matching engine (lack of circuit breakers, automatic margin calls), the number of bids in the limit order book, and the amount of margin being employed this could have been executed as a purely mechanical arbitrage.

Of course in a regulated market that would be blatantly illegal.

Why would anyone have an automated process selling LOW? That's bizarre and just asking for trouble.
Not many people had that set up explicitly, rather, they were trading on margin (loaned capital). The value of ETH dropped so low that they were forced to sell to repay their debts, leaving their accounts empty.
And they dropped so low because the giant sell order was executed at market value instead of a limit order... causing the holder in question to also lose gobs and gobs of potential profit himself. All signs point to one inexperienced person who bought in at the initial ethereum offering of ~35 cents a coin, and found themselves holding 10 million worth of ETH.

Not knowing how an exchange works, they put the order in for sell 33300 ETH at market price to cash in their earnings and ride off into the sunset. The buy book wasn't thick enough to absorb that much sell side @ market, so the market sells and margin calls ate the entire buy down to the very bottom huge buy @ $0.10 each.

So did the value drop that low? Not really. Just due to a very immature and primitive market on one particular exchange, did this happen. When you compare these Crypto-exchanges to modern stock or forex exchanges, you'll see that they are just vastly less sophisticated.

Please let the bubble pop.
"We have recently increased the max amount of margin funding you can take out on the ETH-USD market to $10,000 USD."

GDAX tweet two days before the glitch: https://twitter.com/GDAX/status/876857569850998784

this is a sensationalized headline - the event in question happened on June 23rd, and was basically a really crummy choice in how Coinbase allowed users to structure contingency trades.
This situation is usually a trade bust.
clickbait much?
Bubblemania