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.