The first time I got locked out of Coinbase and GDAX was a week ago when Bitcoin plummeted to just over $2000. No matter what I tried, phone app, Ipad, laptop, etc. Nothing worked. I was pissed. By the time I got access back in, the price had recovered. The one time I want to buy at a decent price they can't handle the volume! I hate you Coinbase!!!
Until today, I couldn't figure WHO was able to purchase the insanely cheap Bitcoin and HOW they did it.
Now I understand.
Today, I was logged into GDAX when the Ethereum price plummeted to $71 then recovered to $300 a few minutes later. This is what happened:
Immediately as the price was dropping, I couldn't put in a limit order. (Yes, that was my first instinct. Don't judge.) I kept getting an error that I wasn't entering a valid value. Panicked, I tried another computer. No access. Coinbase is down. What the???? Still panicked, I did a market buy on the first computer and BOOM, it went through. Now, I didn't get it at $71, (boy do I wish that I did) but I did get it at a price I couldn't resist. But, that's not the lesson learned from today's experience.
The REAL lesson learned was what I witnessed inside the GDAX exchange while it was temporarily inaccessible to anyone that wasn't already logged in.
The spread kept getting wider and wider. The green buy orders disappeared, descending faster that I could read it. The bots or algorithms that generate teeny bullshit orders to keep the spread at 1 cent were nowhere to be found. I don't think they could keep up. Ha. Good for them! I'm not sure what happened to kick this whole fiasco off, but my best guess is that whatever it was triggered a bunch of peoples stop loss orders.
Although the limit buy didn't work, the Market buy DID. Once I entered my market buy it notified me of a 2% slippage. A 2% slippage???? Hell yeah. At that price, I went for it. As the stop loss orders were triggered, Market buys were being executed by those in the exchange (or via API) and low limit buy orders were eaten up FAST. And I mean FAST. Down the price went, then recovered just as quickly as it plummeted. I couldn't believe what I had just witnessed.
A few minutes after the fiasco, the ETH/USD locked up. ( It was still frozen as I write this. See Below.)
I stared at the screen for a good five minutes. What the hell just happened? I replayed everything back in my mind...
How can I get it at a better price next time I pondered.
The lesson learned is that Coinbase/GDAX WILL be overloaded again. We know this. It has happened before, and will happen again. Since there isn't a damn thing I can do about it, except bitch and complain, I decided that I am willing to lock up some of my USD in some ridiculously low buy orders in anticipation of this happening again. Yeah, yeah, that wasn't a profound tip, I know. BUT, after what I saw today, I believe these "Hail Mary" orders are more likely to get filled during a Coinbase/GDAX outage when no one has access.
So here's my message to Coinbase: CRASH. Don't upgrade your servers. Be inaccessible. I just learned the rules to your STUPID game and put my orders in.
I think you should too.
If you made it this far, thanks for reading. This is my first Steemit post with more to come.