In a first of its kind event, Bitcoin and Ethereum crashed to an all-time low, sparking a frenzy among investors and market analysts. The recent good news that Bitcoin’s scaling issues will be resolved amicably using Segwit2x was expected to significantly boost the cryptocurrency, but instead, we saw a steep crash on the 20th of June at around 4:30-6:20 pm EST.
The cryptocurrency nosedived from about $296 to a stunning low of $13 in a matter of minutes, so much so that the entire decline couldn’t even be correctly depicted on the chart.
While Bitcoin’s consensus-driven rally did take the asset to almost $2800, both Bitcoin and Ethereum moved in the wrong direction and fell victim to a flash crash that brought it to almost single digits before rising back to around $330.
Ethereum’s problems started with the Status ICO, fundamentals of which are a bullish catalyst for Ethereum. This is because investors are required to buy Ethereum to invest in status, which would drive up the demand for Ethereum. The Status ICO was highly popular, in fact so popular that it caused congestion in the system, leading to very long transaction wait times and rising suspicions about potential scaling issues in the Ethereum network.
This problem with the Status ICO started a chain reaction of negative market repute that also encompassed Bitcoin. High transaction volume for the Status ICO followed by panic selling led to the brief crash of the popular Coinbase exchange.
The flash crash made the matters worse, dipping the price of Ethereum to unimaginable lows, thus liquidating the margin and filling buy orders for down to $13.
The exact reason behind the crash is no known though, but it appears to only affect the Coinbase/GDAX exchanges, with little impact on trading in other regions – especially Asia where the cryptocurrency continues to rise.