Ethereum Flash Crash Dents Confidence

For long, bitcoin had been the undisputed leader of the cryptocurrency world and its dominance had continued till a couple of years back. But as the field grew and more and more traders joined in, we saw the discovery of other similar currencies which emerged as competition for bitcoin. These provided an alternative to bitcoin whose mining became more difficult and the cost of which also began to skyrocket.

The chief among them has been ethereum which has been able to make some steady progress against the bitcoin dominance over the last year or so. We have been seeing more and more miners in the ethereum space and we are also seeing the trading volumes in ethereum growing steadily month on month. This led to a lot of speculation on how far this could go and whether ethereum would be able to push ahead of bitcoin. But what happened yesterday would have been a huge dampener to the spirit of the ethereum supporters.

Yesterday, we saw the prices of ethereum crash by over 95% as the prices fell to $13 from over $300, causing ETH to temporarily trade as low as $0.10. This happened in a flash and the prices quickly recovered but this had left a huge dent in the confidence of the investors. The reason for the crash is given as some error in the introduction of a new ico but it led to huge volumes as stops were triggered and several investors lost a lot of their funds.

Investors Likely to Hold

This also exposes the danger in such currencies and how volatile such currencies would be in the daily market. With low liquidity at this point of time, all it takes is for one single large order to go wrong which could push the prices in any direction at the blink of an eye. This event should put the brakes on the fast development in this sector as the investors and buyers would like to stage a temporary pullback to see how the currency stabilises itself now.

Ethereum traders blamed GDAX for not controlling a fair trading, and even accusing whoever put the sell order in of market manipulation.

The currency is back above $300 for now but the confidence levels would have diminished by now and it remains to be seen how it recovers from this body blow.