I wanted to share some thoughts on todays flash crash.
For some of few who are wondering what am I talking about, here is some background. There was a "flash crash" on Gdax/Coinbase - the price of Ethereum briefly dipped to unimaginable lows, liquidating margin positions and filling buy orders for as low as $13. In fact, lowest was about $0.10. Many investors according to StockTwits have lost more than $150K in an instance.
Ethereum essentially suffers from the same problems as Bitcoin, that is, chocking up on large transaction volumes in short timeframe. During a badly designed Status ICO, users started executing high gas fee transactions to get ahead of each other most of which are failing but still filling up the blocks and preventing normal transactions from getting in. After some point, network clogged up leading to extremely long transaction wait times and it kept getting worse. I believe this lead to "flash crash" when several leveraged positions were forcibly closed in close proximity to each other. Moreover, according to GDAX, more than 800 stop limit order were hit which further led to cascading failure effect pushing ETH prices to abysmal levels.
My suggestion to investors is to avoid margin positions while trading crypocurrencies. Even stop limits seems to be risky. Its better to just buy and hold for long as prices would most probably appreciate over the time.
