Bitcoin’s offshoot, Bitcoin Cash is soaring. But all might not be as it seems. Coinbase’s exchange displays the price for Bitcoin Cash as $9,500; however, the real gain is more like 64%, which is around the $3,400mark. The price difference starts to get a little confusing though, when Coinbase made an announcement that it would start trading Bitcoin Cash on the GDAX exchange, and this could have caused the price to rise.
This was incredibly short lived though as GDAX quickly put restrictions on trades, which prevented orders from being filled, and in just over one hour, all orders were cleared and the market was taken offline, and is not due to resume until the 20 Dec.
Bitcoin Cash started trading on GDAX in ‘post-only mode’, which restricts traders to order that are not immediate matched; however, this mechanism fell short of the task, causing GDAX to lift the restriction after one hour. This meant that orders were suddenly matched, and the demand is likely to have outstripped the supply, which would cause the price to jump. These restrictions were quickly put back in place two minutes later, because of significant volatility. The ultimately led to the Bitcoin Cash trading launch and a price of $9,500 was displayed on GDAX, representing a spread of $6,000 with other exchanges.
Crypto traders were completely incensed that the price had moved upwards in the hours before Coinbase made its announcement, leading to claims that those in the know obtained coins on the cheap.
Coinbase have been quick to address these accusations and have released a statement saying that it prevented employees from trading in Bitcoin Cash weeks before the listing. Brian Armstrong, CEO has strongly said that the company will take action and investigate whether any staff or contractors had acted on ‘material non-public information’, or insider trading.
There is software that help to monitor and detect traders who are trying to take advantage of other parties. Adam White, the vice president of GDAX said that all systems are built in house, and made it clear that the firm has strict trading rules.
Exchanges, including Coinbase had struggled to keep the markets open as new customers pour in. Whilst there are reasons behind it, it is a major problem that the exchanges must solve if cryptocurrencies are ever going to become mainstream.
Image Sources: Insider Monkey