- An angry trader on the Binance Perpetual Futures platform triggered a LOT of stops
- The ETH/USD perpetual futures market suffered two unique events from a single trader, manipulating price
- Measures have been put in place to prevent this type of event from happening again on the Binance Perpetual Futures market
Binance has one of the biggest futures markets out there, so when an angry trader decides to go ham on a market, it can wreak havoc on other traders and their positions. In the early hours of October 29, one angry trader, or potentially a competitor, sabotaged the ETH/USD Perpetual Futures market to trigger a ton of stop orders.
A single trader caused a massive pump and dump just before midnight, sending the price of the ETH/USD Perpetual Futures up to $571.73, before crashing it back down to its relatively stable level of $390. Then 2 hours later the same trader dumped it down to $200 before pumping it back to $390 once more.
Why on Earth Would You Do That?
Obviously, doing something like this isn’t cheap, so it’s not in the trader’s best interest. This childish behavior is clearly the actions of a frustrated trader who likely was stopped out of a trade unfairly, or right before the market rebounded. On the other hand, it could be another perpetual futures market platform trying to take out the competition or make lives hard for some.
This happened on ETHUSD Perp futures. It was caused by one trader, both ways. We believe this may be intentional sabotage from a competitor. The trader lost lots of money himself. But also caused other stop orders to trigger. We will make a few changes to reduce in the future. pic.twitter.com/XcyDwHP4CF
— Aaron Gong (@AG_Binance) October 29, 2020
A Lot of Upset Traders
A lot of traders that use this market will have woken up to notifications that their stops have been triggered on both ends of the scale. Unless they set recurring stops, then traders will have to reset all their stops, which can potentially take hours depending on the complexity of trading strategies. This is the type of market manipulation that gives crypto a bad name and prevents regulatory bodies from getting behind it and supporting it.
What are Binance going to Do?
In response to the issue. Binance is making some important tweaks to its futures platform. With the goal of preventing this type of “attack” from happening again and running trading for all traders, Binance is going to change the stop order default setting to mark price, not last price. All good traders will do this anyway, but a lot of new traders and those without experience won’t know the difference, so it adds a little more protection for new users.
Binance will also be enabling price protection, so that if the last price and mark price differ significantly, such as in this scenario, then stops won’t be triggered. Think of it as a way to detect short-term market manipulation and render it useless when it comes to harming other traders. In theory you could still manipulate the market using this method, but it would need to be over a larger time frame and it would cost a crazy amount of money.
It’s All Done… For Now
Hopefully other perpetual future markets will follow suit and implement these simple changes to prevent it happening to their platforms and the traders that use them. Another feature that Binance is looking into is more market makers to increase market depth. This will make it costlier for attackers, but this solution will take a bit more time. So, for now, your stops are safe over on the Binance Perpetual Futures platform – phew!