Cryptocurrencies

A Sunday Night Flash Crash in the ‘Most Insane Casino Ever Created’


Michael P. Regan takes a look at the flash crash in Ether over the weekend.

There’s been a lot of talk about how cryptocurrencies are maturing into more of a mainstream asset class following the wildly successful launch of spot-Bitcoin and Ether exchange-traded funds and other forays into the space from traditional finance firms.

Well, perhaps. Yet a major flash crash in Ether as leveraged positions were liquidated served as a stark reminder of how digital-asset markets still lack almost all of the guardrails installed on traditional markets over the years due to various misadventures that hurt investors. The second-largest token was down a bit as traditional markets opened for trading Monday morning in Asia, reacting to concerns about US tariffs against Canada and Mexico. Then in a matter of minutes its losses extended to about 27%, before quickly recovering.

Mind you, this was Sunday evening in the US. The Grammys were on TV. It was about 2 a.m. in London. Asia is a hotbed for crypto-derivatives trading so it was perhaps not exactly the most-illiquid moment of the week, but it was far from the most liquid time either. That has placed a lot of scrutiny on the market makers whose mission is supposed to be to maintain orderly price action.



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