Why Ethereum crashed this week

Ethereum crashed in the middle of the day yesterday due to a single mega-massive trade. While the ticker showed a relatively significant drop in price throughout the day, it was at 12:30PM (on the 21st of June) that a single order kicked the entirety of the Ethereum universe in the pants. Not on all exchanges – not all at once – but the shockwaves were swift and merciless.

In the aftermath of the mega-trade, Vice President of GDAX Adam White sent out a message about what had happened. On GDAX he explained, “on 21 June 2017 at 12:30pm PT, a multimillion dollar market sell was placed on the GDAX ETH-USD order book.” According to records, “this resulted in orders being filled from $317.81 to $224.48, translating into a book slippage of 29.4%. This slippage started a cascade of approximately 800 stop loss orders and margin funding liquidations, causing ETH to temporarily trade as low as $0.10.”

That’s harsh, and certainly not something that happens every day. According to White, there hasn’t been indication of any wrongdoing so far. Not to say that the trade wasn’t devastating, but it wasn’t against any rules. “Our matching engine operated as intended throughout this event,” said White, “and trading with advanced features like margin always carries inherent risk.”
In some cases, users that had margin orders on Ether lost thousands of dollars in an instant. Entire accounts were wiped clean and investments were kicked squarely in the face. Twitter users started using the monetary hashtag “$dETH”. It was an unprecedented bloodbath for $ETH, without a doubt.

Today Ethereum is still in the negative and – compared to yesterday – might even be popping up as positive for some exchanges. It’s not only because of this single trade that the price of $ETH is dropping. It has a lot to do with the nature of the beast – it being largely about ICOs and startup companies that have the option of cashing in their first-wave investment Ethereum into FIAT. It’s not necessarily a great place to be at the moment.