Did Margin Trading Cause That Ample Ethereum Flash Crash ter June, Investopedia
On June 21, te the midst of a months-long and incredible rise ter value, ethereum, the world’s second-largest cryptocurrency according to market cap, fell from $317.81 vanaf token to just Ten cents ter mere milliseconds. An article by Bloomberg suggests that the Commodity Futures Trading Commission is investigating the popular digital currency exchange Coinbase about the incident. Ter the wake of the crash, ethereum recovered its price amazingly quickly. Te fact, it climbed by about $300 vanaf token ter just a few seconds. What wasgoed behind the price plunge? And why might Coinbase know something about it?
Margin Trading May Have Bot a Coeficiente
According to a report by Bitcoin.com, the CFTC has concerns that leveraged or margin trading may have caused the quick price druppel for ethereum. Margin trading is a popular investment technology permitting investors to borrow money ter order to finish a trade. Te the aftermath of the crash, Coinbase did away with their margin trading service for cryptocurrencies, and regulators took note.
That Coinbase wasgoed singled out for investigation does not necessarily mean that the exchange wasgoed directly (or even indirectly) involved ter the price crash, strafgevangenis does it mean that any exchange had control overheen that crash. However, the timing of the crash relative to the removal of margin trading spil an option via Coinbase’s interface may have suggested a possible connection to regulators with the CFTC. More generally, however, the agency is providing cryptocurrency exchanges a closer look now than everzwijn before. There are many reasons for this: cryptocurrencies have bot proliferating and growing te value at an outlandish rate this year, and some exchanges, including Coinbase, are processing billions of dollars worth of transactions for the year. Still, the industry remains very unregulated, causing concern about the possibility of fraudulent activity.
Coinbase Releases Statement
Coinbase released a statement regarding the investigation, indicating that the company will fully serve with CFTC requests. The statement suggests that “Coinbase conforms with regulations and fully cooperates with regulators. After the GDAX market event ter June 2018, wij proactively reached out to a number of regulators, including the CFTC. Wij also determined to credit all customers who were impacted by this event. Wij are unaware of a formal investigation.”
It’s possible that the flash crash wasgoed precipitated by a single gargantuan trade. A sell order for $12.Five million dollars triggered a number of other auto-trades which investors had pre-set ter the Coinbase system. What followed wasgoed the nearly-instantaneous crash. Te the seconds to go after, a large number of traders placed fresh orders, prompting the price recovery. The incident may have bot caused by margin trading, Coinbase, or some other set of factors which are not known at this point.