Cryptocurrency “Flash Crash” Kills $15 Billion in Market Value

June 13, 2018         By: Steven Anderson

It was a downright disaster for cryptocurrency holders just recently; a “flash crash”, a sudden, catastrophic strike in the markets that takes value with it like a sinkhole takes, well, everything hit the market. It all started, reports note, with the usual suspect: bitcoin.

The reports suggest that the entire cryptocurrency market lost about six percent of its total value in just one day, around $15 billion total. The fall stemmed from a hefty loss in bitcoin, when the first major cryptocurrency lost about $300 of value in just one hour.

Since cryptocurrencies are inherently tied together on a certain level—even if only psychologically—when one major crypto takes a hit, a negative halo effect of sorts kicks in and the rest lose ground too. Ethereum, for example, lost five percent, and recent darling Ripple took a hit to the tune of 5.2 percent. That took $1.5 billion away from Ripple’s market cap alone. IOTA, a top 10 cryptocurrency, lost about 12 percent of its total value, or around $600 million.

So what hit cryptocurrencies like a bolt out of the blue? Some suggest it was a set of subpoenas launched from the US Commodity Futures Trading Commission, targeting several major crypto exchanges like Bitstamp, Coinbase and Kraken. The subpoenas in question are said to target issues of price manipulation in the field.

Additionally, an attack on Korean exchange Coinrail cost the exchange $40 million in various altcoins. Coinrail isn’t a big exchange, but it was big enough to have that kind of value available to steal. Some note here that Coinrail was sufficiently obscure that it wouldn’t have caused the crash by itself. However, it may have contributed to it, especially with attacks on Aston X, DENT, and Tron also taking place in the same time frame.

It’s a part of the cryptocurrency game today, sadly; with mainstreaming still quite a ways off, sudden and frantic shifts in value like these are bound to happen. Those who aren’t going in prepared to HODL—hold on for dear life—are likely to end up hit by the rapid changes this field will undergo.

It doesn’t make it any easier, but those who play the long game here might well end up in the best position of all. Except maybe for those who got in early.