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Market sees significant pullback! Ethereum on Kraken exchange dropped to as low as $700, what exactly happened?

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Market sees significant pullback! Ethereum on Kraken exchange dropped to as low as $700, what exactly happened?

Yesterday's significant pullback caused the price of Ethereum (ETH) on the Kraken exchange to briefly drop to $700. What exactly happened?

Kraken Exchange Experiences Price Anomalies

The cryptocurrency market saw a significant pullback yesterday. According to data from Binance Exchange, Bitcoin dropped from the $57,000 level to the $47,000 range, a decrease of approximately 10,000 points, with other coins experiencing drops of 20% or even higher.

While it's not uncommon for Bitcoin's decline to lead to an overall market downturn, would you be surprised to hear that Ethereum briefly dropped to $700 yesterday? According to a tweet by Camila Russo, a columnist for Defiant, Ethereum's trading price on Kraken Exchange plummeted to $700 yesterday but quickly rebounded to the $1,700 mark, showing a significant discrepancy in price movement compared to other exchanges.

Why Did This Happen?

According to Coinmetrics analyst Kevin Lu, other trading pairs on Kraken Exchange, such as Bitcoin and DOT, displayed extreme price deviations from the overall market yesterday.

Some believe that Kraken Exchange's significant drop may be related to traders deleveraging. Although Kraken's maximum margin support is only up to five times, which is not high compared to other exchanges, differences in liquidity may be the main reason for the price collapse. When most traders rush to liquidate leveraged positions, selling pressure floods the market. Without corresponding buying support, prices can quickly collapse.

Another perspective presented by Kevin Lu suggests that the abnormality in many market trading pairs on the exchange indicates not price manipulation or investor operational errors but rather some glitches in their order matching engine. However, Kraken CEO Jesse Powell is not satisfied with this explanation, stating that Kevin Lu's viewpoint lacks direct evidence and is a misleading, defamatory, and irresponsible statement towards Kraken.

When asked by netizens to explain the actual issue, Jesse Powell stated:

"Selling pressure drives prices down. Buying drives prices up."

Regarding this incident, Kraken Exchange only mentioned on Twitter that a large amount of trading activity occurred on the platform and did not mention facing any system issues during the volatility.

In fact, besides Kraken experiencing abnormal prices, many exchanges encountered technical issues during the significant drop. For example, exchanges like Binance, Huobi, FTX, etc., all experienced outages during the period of drastic price fluctuations yesterday, causing many users to miss bottom-fishing opportunities and some users to be forcibly liquidated due to the inability to close positions or add margin in time, resulting in losses.