Flash crash pushed Ethereum to $700 – what was going on?

Kraken: Flash crash pushed Ether (ETH) to 700 USD – what was going on?

Ethereum last traded at USD 700 in December 2020 – the older ones will remember. On the bitcoin exchange Kraken, ETH was briefly available again at a bargain price – what is behind this?

Rarely are exorbitant profits and devastating losses so close together as in crypto trading. But what happened on the crypto exchange Kraken on 22 February should have caught even the most hardened leverage trader cold. In the course of the violent correction on the crypto market, a veritable flash crash One Bitcoin a Day occurred on Kraken for individual cryptocurrencies. In addition to Cardano and Polkadot, this particularly affected the Ether price (ETH). Within a few minutes, ETH had fallen by 1,000 US dollars to 700 US dollars, only to jump back to its pre-crash level shortly afterwards.

Consequently, the question arises as to why assets such as Ethereum, Polkadot and Cardano have made such a belly landing on Kraken of all places.
Coinmetrics: Faulty match making caused Ethereum flash crash on Kraken

For Kevin Lu of blockchain analysis firm Coinmetrics, the matter is clear: he suspects a faulty trade making engine behind the Ethereum flash crash on Kraken – „today’s market crash is brought to you by Kraken’s faulty trade matching engine“ (Twitter).

The Coinmetrics analyst embellished his tweet with a graph comparing the violent swings in the Ether price on Kraken with price action on other bitcoin exchanges at the same time.

With his tweet, Lu called out the exchange’s CEO himself.

CEO Powell denies mistakes

Jesse Powell calls the accusation „speculative“ and „irresponsible“:

Hi Kevin, I’m a fan of @coinmetrics, but don’t you think it’s irresponsible to make misleading, disparaging and slanderous statements based on your own speculation without direct information? I’m sure you can come up with a plausible alternative. I hope you issue a correction.

Jesse Powell via Twitter

Powell, on the other hand, believes the extreme price fluctuation in Ethereum is a consequence of supply and demand – and thus a completely normal scenario.

This is how Powell responded to the demand for clarification made by another Twitter user: „What do you mean by „what happened“? Selling drives the price down. Buying drives the price up.“

Admittedly, Powell did not succeed in smoothing the waters with this. The fact that Kraken – like other crypto brokers – was temporarily unavailable also plays a role here. The following screenshot was taken at 15:30: