On Monday, the price of Ethereum (ETH) briefly dropped by over 50%—from around $1,600 to $700—on crypto exchange Kraken, prompting numerous debates on whether this was some kind of technical malfunction.
However, the dip wasn’t an error and could have been caused by a whale trader, the platform’s CEO Jesse Powell told Bloomberg today.
“We’re in the process of investigating. There doesn’t seem to be any evidence of a trading-engine malfunction. It seems like trades processed accurately,” Powell said.
He explained that users’ losses could have potentially been amplified by the availability of margin trading on Kraken—a practice where customers use funds borrowed from a broker to trade.
“It could be that a single whale just decided to dump his life savings,” Powell added.
On February 22, ETH’s drop was part of the massive crypto market’s decline as Bitcoin (BTC) alone plunged by roughly $10,000—its biggest daily dip so far. However, Ethereum’s price didn’t fall nearly as low on other major exchanges that day, trading at around $1,500.
Whatever the case may be, it is unlikely that Kraken would retrospectively cancel any of the trades conducted on Monday, Powell noted, but “some” compensation to the affected traders may ensue.
“We may end up doing something for these people. We’re looking into it,” Powell added.
Still, the cryptocurrency market remains a risky and volatile place, so traders should be prepared to lose money.
“It’s still a bit of the Wild West. You still have to do your own research and learn how things work, and you’re kind of trading on professional mode on many of these venues,” Powell concluded.
As CryptoSlate reported recently, Monday’s market dip has also triggered the second-largest wave of liquidations in Ethereum’s decentralized finance history as a total of $24.1 million worth of positions got wiped.
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