Fast worth fluctuations within the Ethereum market are fueling hypothesis that market makers' grid methods had been fallacious.
Knowledge exhibits that this technique disruption led to sudden and sharp fluctuations in inventory costs. $ETH worth. Inside a brief time frame, long-wick candles had been shaped in each upward and downward instructions, leading to a major enhance in quantity. These vertical, sharp worth actions are typically known as “lightsaber” patterns, and point out a state of affairs the place liquidity is shortly eradicated and there’s lively buying and selling within the order e-book.
Chart exhibiting worth modifications $ETH.
Grid methods usually intention to revenue from unstable markets by inserting automated purchase and promote orders inside a selected worth vary. Nonetheless, in instances of excessive volatility or surprising liquidity gaps, this order chain can backfire and trigger much more unstable worth actions. Triggered stop-loss and liquidation orders can additional amplify volatility, particularly during times of excessive leverage.
*This isn’t funding recommendation.
