Ripple has long been considered an altcoin with huge potential. Identified as XRP on cryptocurrency exchanges, the Ripple project was fortunate enough to establish key partnerships with important businesses in the financial sector. Despite all the positive sentiment, the XRP token only managed to achieve a lifetime high of about $3.80.
Then it soared to $8,300 in a single day!
Yes, you read that correctly. The XRP token briefly traded at $8,341 in October 2019. The spike in value was the result of a curious error, but it still was enough to create a large spike in the charts for the cryptocurrency token. Let’s look closer at this incident and examine the events that pushed XRP past Bitcoin for a minute or two.
Happy Accident or Purposeful Hack?
Ripple, or XRP, is a token that once reached a value of about $3.80 on most cryptocurrency exchanges. Most investors were happy with this and considered the token a smart investment. It has hovered below $1 on many occasions and even dipped to less than $0.30. Nevertheless, the token is one regarded as a potential player in the crypto market.
That positive sentiment may be able to explain the curious events of October 2019. A sale order placed on a cryptocurrency exchange known as Coinbase offered XRP for sale at the $8,300 value. There are two theories as to how the inflated value came to be a part of the sale order.
The first is that someone entered in the value of Bitcoin which was around that $8,300 mark at the time of the trade. That would have been an honest mistake. The second is that someone used the accounts at Coinbase to create a hack of sorts that benefits from low liquidity accounts that appear to be compromised. The hack could have allowed for the potential of account manipulation.
Either way, the outcome was the same. The sell order was executed and one individual paid the requested amount. This created a market cap of $361 trillion for XRP. That’s more than the cap of the 100 largest corporations in the world combined. Of course, the event did not last and XRP was soon back at its normal value.
Other Examples of Strange Crypto Market Movements
The XRP incident is not the first curious one involving crypto value. It has happened before on a few occasions, notably when altcoins were introduced to the market with an ICO. Many will recall that Zcash (ZEC) had a value of 20,000 BTC when it first opened on exchange platforms. That would have made the token worth about $1.37 million, but that value did not move beyond the initial launch. It dropped rapidly to a more reasonable value of $5,841 the next day and kept falling.
Investors have come to expect this where ICOs are concerned. Today it is far more likely that a token will enter the marketplace and then begin to immediately drop. Many so-called altcoins are eventually removed from cryptocurrency exchanges due to low trading volume and a small market capitalization. They never really get off the ground.
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The thing about some weird market movements with cryptocurrency is that they are easily corrected before they can be exploited. It would be rare that the average investor could seize the opportunity to make a large profit before the glitch was discovered.
Can You Profit with Cryptocurrency Sell Orders?
There is something to be considered here. If a seller was able to place a crazy market order for XRP and have that market order executed, what does that mean for other investors? Could they try the same tactic and see if it works
Truthfully, it might not be a bad idea to post up some crazy sell orders and see if you can be the one to profit from a mistake. Once the profit has been made there is really no way to deny it to you. With that being said, the odds are not in your favor. It is more likely that a mistake like the one that happened with XRP is an exception to the rule. It could be many years before such a mistake is made again.
There is a cautionary tale here about investing in cryptocurrency and being alert to the movements of the market. Cryptocurrency is a very volatile asset class. On a single day the market can swing wildly from one extreme to another. Just watch Bitcoin to see an example of crypto volatility. If an investor has enough capital to weather the downturns there are opportunities each day to make a profit.
Active day trading is a strategy that many cryptocurrency investors use to reap large profits, but that kind of trading is not for everyone. It requires an almost constant attention to the market and the capital to make the most of large trades. It also carries a significant level of risk and should be avoided by the novice cryptocurrency investor.
