chepicap.com
Bitstamp is launching an investigation into the trading activity that saw the Bitcoin price drop to $6200 on the exchange earlier today. Around 5000 BTC was apparently dumped in a number of transactions from one user in a short space of time.
According to the exchange, this large sale of Bitcoin had a heavy impact on its order book, but otherwise the platform was functioning as it was designed to. Bitstamp claims that it will be investigating the order, as this is standard procedure whenever there is an event that causes large-scale price movement.
1/2: A large sell order was executed on our BTC/USD pair today, strongly impacting the order book. Our system behaved as designed, processing and fulfilling the client’s order as it was received.
— Bitstamp (@Bitstamp) May 17, 2019
After the flash crash to $6200 on Bitstamp, the BTC price dropped significantly across a number of other exchanges. A huge number of BitMEX derivatives positions were automatically closed, as their pricing is based 50% on Bitstamp and 50% on Coinbase Pro. Not long after this, the BTC price started to climb back up again.
2/2: We closely examine every event that causes large-scale movement in our order book and have started an immediate case investigation.
— Bitstamp (@Bitstamp) May 17, 2019
There was a wide variety of responses from members of the crypto community on Twitter. Some believed that the Bitstamp trader was clearly attempting market manipulation, and other markets would have been punished for doing so, and others doubted whether Bitstamp's platform was functioning as it ought to be.
If the order was placed and executed as intended, then the goal of the seller was to inflict maximum impact. In equities that person would be fined and potentially locked up depending on the jurisdiction. Love to see how this turns out but would imagine nothing happens.
— taiwandan (@taiwandan) May 17, 2019
The massivly latent orders that people reported as inability to buy or market buys skipping over orders is symptom of mass queuing and and slow processing.
— I am Nomad (@IamNomad) May 17, 2019
I realize you have a new matching engine on the way but that is not "functioning normally"
On the other hand, it was also pointed out that Bitstamp's relatively low liquidity caused the price crash, but as an exchange it has no obligation to offer more. It was suggested that BitMEX's pricing of its derivatives should be tweaked to reflect these kind of possibilities. Others claimed that the crypto market works fundamentally differently from the equities markets, and that people shouldn't expect the same kind of safeguards. The fact that BTC was able to recover so well from this crash was also used as an example of how the asset is maturing, and suggests taht the bull market could soon pick up again.
Maybe @BitMEXdotcom should adjust the $BTC index specifications according to the liquidity (or at least volume) of the exchanges from which they use the price for calculate the index.
— CryptOstrich (@execitor) May 17, 2019
Agreed, don’t understand how people are getting bent over someone selling their $btc because it doesn’t vibe with their own wants.
— Dead Day Revolution (@DeadDayRev) May 17, 2019