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Ethereum Volatility  –  Flash Crash Followed by Explosion

Volatility isn’t exactly an unfamiliar concept for the budding world of cryptocurrency, but this last couple of weeks, Ethereum — the best 2017 performer of the scene — gave it all a new meaning.

Having reached highs in excess of $410 at one point in early June, and having had its value taken to about $317 by a subsequent market correction, the cryptocurrency fell to $0.10 last Wednesday.

Yes, you read that right: at one point during last Wednesday (21st of June 2017), on the GDAX exchange, an Ethereum was trading for $0.10. What’s still more interesting is that since then, ETH has rebounded massively and it is not worth more than $317 again.

What caused the flash crash though and how did the subsequent rebound come about?

The causes behind this ridiculous volatility do indeed say quite a bit about the maturity of ETH and the cryptocurrency vertical in general. There was a lot of speculation in this regard too, but until GDAX President Adam White chimed in, no one really knew anything certain.

According to White, the incident that triggered the temporary collapse was the placing of a multi-million dollar market sell order, which shook the very foundations of the Ethereum best place to order levitra online blockchain’s digital token. The above said order resulted in a price-slip from $317 to about $224, enough to trigger the execution of some 800 stop-loss orders, which effectively battered the token into the ground. Margin-funding liquidations also contributed to the meltdown, making matters worse still.

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Obviously, seeing ETH trade as low as a dime, prompted many investors to begin stocking up on the token, a move which then drove the price back up sharply. In response to the kneejerk moves, GDAX temporarily suspended the trading of the ETH-USD pair.

An investigation into the matter was also launched, which came up with no evidence of wrongdoing of any kind.Since the incident, the value of the Ethereum digital token continued to rise, within more reasonable limits this time. The June 29 session saw it shoot as high as $329. According to Redwood City Ventures’ Sean Walsh, the spike was the result of investors’ natural reaction to recent volatility. The sell-off which lead up to the flash crash, was, by all means, drastic and as such, it called for a natural correction, which is most certainly what we are witnessing right now.

Kris Leonidou, Echofin


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