At around 10.00AM of 10th Feb, BTC-e had hit the low level of 102 USD/BTC from 700 USD half hour before.
How is it possible at all? And even after such a big dip, how did the market recover and survive?
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2 Answers
It simply is someone with a lot of coins, who sold on the open market and depressed the price (temporarily). It was an economically unwise decision, since they missed out on the fair market value as you saw.
This is one example of how the Powerful Elite can Thwart Cryptocurrencies.
answered Feb 11, 2014 at 15:40
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2Maybe it wasn’t only one seller with many coins but many others who had an automated trigger set to sell their coins at a certain low limit (e.g. 550$), which then set of an avalanche of more triggers pulled and so on.– erikFeb 11, 2014 at 15:45
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And then a bunch of other people would have their own triggers start another avalanche of buy orders when they see the price has gotten really down, causing it to grow a bit again, prompting another flurry of "buy" orders to try to ride the wave, plus hundreds of bots furiously buying cheaply at BTC-e to sell elsewhere... all of which would cause such "hiccup" in the prices to pass really fast. Feb 11, 2014 at 21:32
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1Had it been a sudden spike in prizes rather than the opposite, same thing would've happened - BTC-e is not the only exchange in the world, nor the biggest, and by now there are plenty of bots trying to take advantage of price differentials between markets when they become too large, quickly reducing such differences to the point of unprofitability. Feb 11, 2014 at 21:34
I think it was automated trading bot avalanche.
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Yes and no. It was caused by cascading margin calls. When you have a leveraged buy and the price drops, you have to sell the underlying asset to cover the margin call. This causes the price to drop, which can cause other people with similar leveraged buys to suffer margin calls. Feb 12, 2014 at 5:42
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