Ethereum Market Manipulation

[tigerpiper]

So way back in the day I won 1.33 bitcoin on Seals free rolls. I sold 1 when it reach $100 and donated it to the free roll, then sold the remaining .33 when it reached $300, and kept that $100. Boo hoo me as I quit playing when it was $4 because it wasn't worth my time.

A friend of mine got in on the Ethereum ICO, and now has a $400k stake. He doesn't make much money, and I keep telling him to sell, but he's the smart one, not me, see paragraph 1.

So I read with interest this story, about how the Ethereum price crashed to 10 cents momentarily the other day. How could this happen?

http://www.cnbc.com/2017/06/22/ether...lar-trade.html

Market manipulation, that's how. So many speculators have automatic stop loss orders (and margin calls which act the same way.) They buy at $250, for example, and it goes to $300, then they put in a stop loss order to automatically sell at $280 if it drops, theoretically locking in a 10+% profit.

Wrong.

What happened was a savvy group put in several automatic buy orders, some as low as 10 cents, then sold a large (compared to the market) amount of Ethereum causing the price to go down. Because of the size of the sell order, it satisfied all the "buy" orders at lower and lower prices, which then triggered the automatic stop loss orders causing a sell off. Which did not have any
"buy" orders left to satisfy, all the way down to 10 cents. Then the initial seller, presumably, rebought all the Ether he just sold for a huge profit. And the speculators were busto, getting back 10 cents a coin which they paid $250 for.

http://www.coindesk.com/ethereum-cla...change-kraken/

This could happen in the NYSE, but the markets for such companies are in the billions of dollars, so it would be more obvious and hard to put together a sell order large enough to start the chain reaction (maybe illegal too.)

Now there's a class action against the exchange (lol). I have personal knowledge about class actions AND these attorneys, and the chances of the speculators getting anything are near zero (e.g. a coupon for next 5 exchange trading fees! Valued at $10m total in coupon money, attorneys fees of 33% payable in real money. That's the best result. There are worse.)

My friend says this couldn't happen to him, because he "invests" and doesn't "speculate". I think that's bs, but whatever.

I think at the end of the day my conclusion is you invest in these, and unless you are extremely savvy, you are likely to get fleeced. Pretty smart of the initial sell group, taking advantage of a small, speculatory market.

I also think the whole thing is a dutch tulip bulb speculation, nearly a ponzi scheme, and it will come crashing down eventually, but that's just me.

[sonatine]

oh.

[Sanlmar]

Is this your friend waiting in line for a bed?

[snake_in_the_ass]

Now there's a class action against the exchange (lol). I have personal knowledge about class actions AND these attorneys, and the chances of the speculators getting anything are near zero.

https://techcrunch.com/2017/06/24/co...m-flash-crash/

[tigerpiper]

Now there's a class action against the exchange (lol). I have personal knowledge about class actions AND these attorneys, and the chances of the speculators getting anything are near zero.

https://techcrunch.com/2017/06/24/co...m-flash-crash/

Interesting.

My friend is a public defender. Well paid by some gauges, but $400k is retirement level money for him.

[Rahrahrasputin]

It's the margin calls that fucked people over so this actually is irrelevant to your friend.

/thread

[Sanlmar]

It's the margin calls that fucked people over so this actually is irrelevant to your friend.

/thread

What is relevant is that the price knocked on the $250 door 3x (daily chart) and they let Ethereum into the basement.

Everything else looks equally shitty.

But the fundamentals are still sound. Lol

[tigerpiper]

It's the margin calls that fucked people over so this actually is irrelevant to your friend.

/thread

That's why he said he was an investor not a speculator,
Makes no sense to me

[BetCheckBet]

Why would people have margin calls at under a buck? Were these placed like years ago?

[tigerpiper]

Why would people have margin calls at under a buck? Were these placed like years ago?

The buy orders were at 10 cents, or some of them. Either posted long ago, or recently as part of the manipulation.

[Rahrahrasputin]

Look up margin calls. Basically it's like you borrowed money from the exchange and it auto sells your shit to cover it at any available price? I think anyway, it's new to me really.

[Belly Buster]

A lot of exchange trading is done on margin. This means you don't actually pay in full for the commodity up front.

When you open a position (buy or sell) you pay an initial margin, say 10% of the underlying value.

If your position moves against you, you then have to pay a variation margin based on the current valuation. When such a condition exists, this is a margin call.

If you fail to fund your margin, the exchange will close out your position by selling (or buying if short) your commodity.

[Rahrahrasputin]

A lot of exchange trading is done on margin. This means you don't actually pay in full for the commodity up front.

When you open a position (buy or sell) you pay an initial margin, say 10% of the underlying value.

If your position moves against you, you then have to pay a variation margin based on the current valuation. When such a condition exists, this is a margin call.

If you fail to fund your margin, the exchange will close out your position by selling (or buying if short) your commodity.

Okay right so that's it. If I recall they were allowed to pay 33%. Cue flash crash and all of their shit got sold for nothing when the price momentarily tanked.

Anyone making use of margins in this case is crazy. The nasaq flash crashed before when the Syrian army hacked the white house twitter. Since this market is way smaller and inherently sketchier, anyone who lost out in this case was a complete idiot and probably just wanted to buy more than they could afford to out of retard greed.

If you're holding long term it means nothing. Just an amusing thing to read about.