The history of flash crashes
The flash crash that took place in May 2010 was named so as it was a crash of the United States stock market, at around 2.32pm EDT and lasted for approximately 36 minutes. In June of 2016, one minute after 4am EDT, as the European market was warming up for trading, gold suddenly plunged $18, or as much as 1.6%, to $1,236 an ounce before bouncing, on a massive surge in volume with over 18k contracts, or just over $2 billion national, trading in a seconds. A total of 18,149 lots were traded on Comex in just a minute, before falling back to 2,334 lots an hour later. As so often happens, the gold plunge dragged silver down with it as well.
The ether flash crash of 2017
In June of 2017 the price of ether crashed as low as 10 cents from around $319 in about a second on the GDAX cryptocurrency exchange. As the price continued to fall, another 800 stop loss orders and margin funding liquidations caused ether to trade as low as 10 cents.
What might this mean for Bitcoin?
No one can know for when or the time in the future, but with the numbers of concentrated holders and the hold on for dear lifers (simulator to the gold bugs) the probability of the stage being primed for a Bitcoin flash crash seems likely. A lack of buyers and not a large amount of sellers could seemingly trigger a cascade of stop orders until a buyer is found 50-90 percent lower this would transpire in seconds.
This would definitely cause a media frenzy and a lot of theories and chatter would emerge over a Bitcoin bubble etc. is Bitcoin a bubble perhaps but the the real question is if it is then what inning are we in. There some probability that we could see prices of greater than 100k.
The authors current assessment of inflows seems to point to 10k by 2018? If you add in Bitcoin cash and Bitcoin gold we are already at the 10k mark.
Disclaimer this article is for informational purposes only and does constitute investment advice.
Disclosure the author may hold Bitcoin.