Why does such a sudden price spike happen?

[nelson4lov]

Now this was my question before... Yeah have seen this a few times on other altcoins is this some kind of bug or manipulation?

I'm not familiar with how the market works like this so it's a bit ambiguous for me, maybe someone can enlighten me in detail so I know the reason behind it.

Sometimes btc is sold at a very low price from the normal market price? Is that someone doing that?

It's not really a bug. Someone actually paid that price before it got printed on the chart. There are a normal of reasons that can result in it but my money is on the one by @Wapfika:

Short answer due to the thin liquidity on the orderbook

When POL was listed, there was not much liquidity in the orderbook and as thin as it is, it usually leads to wild volatility. Here's an example, if someone comes in and place a market order for POL but tiny liquidity in the orderbook from $0.37 to $1, everything is swept off till the $1 mark. But later on, other traders come in and decide the price is not worth paying for a dump it back now that there is sufficient liquidity on either sides to support it.

[shinratensei_]

can be attempt of price manipulation by setting order book on the high side of the price and artificially opening buy order to hit that price, or the liquidity is too thin like mentioned by many people, possibility of these playing out is endless in centralized exchange even more so in 3rd rate exchange with not so reliable people behind the company.

but such manipulation getting rarer because most of coin nowadays already have pre-market open to determine the real price and usually price spike like this won't last long or won't even be happening because the price discovery zone already being done when we're still in pre market granted pre market isn't necessarily reflecting the real price unlike in listing because many time the total supply of certain new coin is undisclosed until listing takes place.

CATI recent listing is prime example of that

[ethereumhunter]

We have seen that many times and not just happen to Polygon but also for other coins. When people thinks that the coin will jump so high because of many update from the project, they will buy as many amounts they can without think about how if the price is down so deep. Sometime the greediness attract them to buy more without think what will happen later especially when the price can reach the higher price. The greediness about making a big profit from the coin push them to keep buying without think much about the situation. They actually know that when the price suddenly increase so high, the price can back to lower price with fast and leaves people who already bought in a high price without notice. That makes many people lost their money and stuck in a high price without having a chance to sell at that time.

[cryptoaddictchie]

Probably someone just made a wrong set of price and the higher limit price was set at $1 its good thing that some exchange reduces the potential limit to a lower bound since before theres a time that a high price or a lower price can be set and if anyone caught with that can get the order executed. This is not rare, many events a spike happened out of nowhere.

[SmartGold01]

Probably someone just made a wrong set of price and the higher limit price was set at $1 its good thing that some exchange reduces the potential limit to a lower bound since before theres a time that a high price or a lower price can be set and if anyone caught with that can get the order executed. This is not rare, many events a spike happened out of nowhere.

You are correct on this as I have also witnessed this as well with a coin at then, although all didn't triggered but few. What happened is that people who sets their orders at 1$ are above the selling price, I mean if the pump was a total about of $10-15k and selling order is $100k worth of coin, only the first set of people who placed sell order at 1$ will likely get triggered at price 1$ and exhausted the limit of $15k. That is to say that all exchange gives priority to first In line before the sharp drop to the original price. Please correct me if I'm wrong.

[cryptoaddictchie]

I mean if the pump was a total about of $10-15k and selling order is $100k worth of coin, only the first set of people who placed sell order at 1$ will likely get triggered at price 1$ and exhausted the limit of $15k. That is to say that all exchange gives priority to first In line before the sharp drop to the original price. Please correct me if I'm wrong.

Yes thats my initial thinking too as order based should be on first executed first but the chances of getting the higher price its very minimal incident only if theres a noob buyer who mistakenly for his order. Or also someone trying to experiment id his order will be hit and use a buy order on his set price. Can be also possible.

[SmartGold01]

I mean if the pump was a total about of $10-15k and selling order is $100k worth of coin, only the first set of people who placed sell order at 1$ will likely get triggered at price 1$ and exhausted the limit of $15k. That is to say that all exchange gives priority to first In line before the sharp drop to the original price. Please correct me if I'm wrong.

Yes thats my initial thinking too as order based should be on first executed first but the chances of getting the higher price its very minimal incident only if theres a noob buyer who mistakenly for his order. Or also someone trying to experiment id his order will be hit and use a buy order on his set price. Can be also possible.

Good! I also have this idea though I don't if it works that way as well, let say the original price is 0.036$ and there are people who set a sell orders at 0.038$ to 0.9$ the system also executes starting from 0.036$ to 0.9$ and the limit is $15k and selling order is above that price then people who place such orders won't be triggered..

[YOSHIE]

Why does such a sudden price spike happen?

That's the concept of the crypto market. Prices are very fundamental, it's hard to predict, falls and rises can happen suddenly, let alone trading methods, For this reason, every one of us who wants to trade crypto must consider it wisely and also analyze it appropriately to be protected from losses.

The crypto market is a market that is difficult to predict, especially regarding prices, many people suggest learning more before carrying out activities in the crypto market, because everything can just happen without notice and no one knows, especially about prices, so be careful when doing anything with crypto, so as not to lose.

[EarnOnVictor]

As you guys know, there was a Matic token swap to Polygon on Binance and other exchanges. Yesterday, Polygon got listed again on Binance but there was a sudden, unusual behavior. Matic's price was nearly 0.39 USD and someone paid up to 1 USD per token and then the price went down to normal price again.
This isn't something new of course, I have seen it many times but I don't really understand why such spikes happen. Why would someone pay $1 on Matic when he or she could buy tons of it for only $0.39?

Click on image to zoom

What you termed the "payment" of a thing is what I don't understand, and if anyone pays at that level, then such has been a victim of a "bucket shop". This is why we should wait for a while when a new listing is about to happen, otherwise, we may experience a situation like that.

However, I've investigated this kind of spike in exchanges when they just listed a new token or coin but there have never been any satisfactory reasons for it other than they just did as they liked even as they claim some factors if you asked them. With three exchanges listed at almost the same time, their charts of the token/coin would have different peaks and bottoms which can only suggest that they might be swindling people of their money at those levels (bucket shop), those prices (peak/bottom) are not real.

[Falconer]

-snip-

That's the concept of the crypto market. Prices are very fundamental, it's hard to predict, falls and rises can happen suddenly, let alone trading methods, For this reason, every one of us who wants to trade crypto must consider it wisely and also analyze it appropriately to be protected from losses.

The crypto market is a market that is difficult to predict, especially regarding prices, many people suggest learning more before carrying out activities in the crypto market, because everything can just happen without notice and no one knows, especially about prices, so be careful when doing anything with crypto, so as not to lose.

Prices can spike suddenly, but behind it all there must be a trigger. The same thing when the price moves down quickly, the trigger must be there and it is clear that the trader will not get a notification that the price will change in the following hours. Every trader certainly needs to observe price movements in the market, some trading indicators definitely help, so they must still observe it even though they can actually execute it automatically if there is a stop loss or take profit feature.

An initial warning for every trader is: crypto trading activity is a high risk activity. Make sure you consider all the consequences wisely and every decision you make must be based on your own will. At least that's the warning on almost all exchanges, which is obviously important for novice traders to understand.

[Septex]

This is not unusual in the cryptocurrency market.  It is normal for altcoins to fluctuate in value. But at the end of the day, it can be seen that these coins are pumped in the market at the beginning, but at the end of the day, they go back to their place. Then its value is stable. In most cases, those who take trades actually see a dump, but many go into panic mode and rush to sell what seems like more dumping. But it is seen that after some time it returns to its previous position and pumps. It can be just the opposite.

[mirakal]

This is a common scenario with new coins when listed in the exchanger. But this spike only takes a few minutes before their price trends normalize. Even though Polygon is not a new project, it is still experiencing the usual market reactions. That's why some project owners limit the number of coins available for sale—to maintain price momentum and prevent those big drops that frequently occur. 

That is why we really need to analyze carefully before buying coins. Sudden spikes aren’t usual, and they usually come with a significant drop in returns. Let’s not rush; rush decisions can lead to regrettable outcomes, which are very often to happen. 

[jaberwock]

We have seen that many times and not just happen to Polygon but also for other coins. When people thinks that the coin will jump so high because of many update from the project, they will buy as many amounts they can without think about how if the price is down so deep. Sometime the greediness attract them to buy more without think what will happen later especially when the price can reach the higher price. The greediness about making a big profit from the coin push them to keep buying without think much about the situation. They actually know that when the price suddenly increase so high, the price can back to lower price with fast and leaves people who already bought in a high price without notice. That makes many people lost their money and stuck in a high price without having a chance to sell at that time.

In short, a spike in price is only normal and happens too on other financial markets not just here on crypto. Update can sound an improvement but not all times. I've seen an update that also looks like a downgrade and people may not like it, resulting for the project to experience a slump in price. It would be better for them to read the updates first and think if it's a good one or not before they rush on buying. If the price rice, well great and this means they can now sell for profits. If they are aware that a sudden pump can also lead to a sudden dump (which is true) then that's good. It shows that they have an experience. They won't buy at highs and be like the others to get trapped.