Bitcoin suddenly flash crash to $684 on Binance, mistake or market manipulation?

The volatility in the cryptocurrency market is not surprising. And a flash crash is not a new phenomenon in the market. Last night, Bitcoin, the world’s largest cryptocurrency by market capitalization, encountered a brief crash that caused the price to drop to $ 680 area on the world’s largest exchange Binance, losing more than 90% of its value. in US dollars. The flash crash occurred in the BTC/ USDS pair but recovered quickly afterward.

Bitcoin flash crash to $ 680 area

The flash crash happened after someone placed an order to sell 8 Bitcoin for $ 60,000 on Binance. It happened with the BTC/ USDS pair. USDS is a stablecoin with pegged prices based on US dollars.

Bitcoin flash crash on Binance 2

Source: TradingView

With a 24-hour trading volume of just $ 130,000, the aforementioned sell order accounts for nearly half of the daily trading volume so it’s not surprising that it pushed Bitcoin’s price to as low as $ 684. But it quickly recovered soon after.

Despite the flash crash, BTC is currently trading at $ 7,433, representing a more than 2% increase at the press time.

BTC price today | Source: Coinmarketcap

This is not the first time an unexpected move like this happened on the BTC / USDS pair. In April, when the Bitcoin price was $ 5,000, it soared to $ 11,000 on this trading pair, also on Binance.

The last time Bitcoin was traded for $ 680 area was in 2016. Back then, Binance didn’t even exist yet.

Mistake or manipulate the market?

Many will question why someone would place a sell order at a price below market price to trigger this flash crash. There are three hypotheses for this case:

  • The first hypothesis was simply because they had made a mistake and placed the limit sell order much lower than the market price. If this is the case, the buyer is extremely lucky and can buy Bitcoin in bulk for less than $ 700.
  • The second hypothesis is likely to be market manipulation. Perhaps the trader is looking to bring the market down and short BTC (the act of betting against its future price). Trading margin or leverage can be used to increase efficiency. However, this is unlikely in this case because there is no future trading for the BTC/ USDS pair.
  • The third hypothesis is that coins may be sold below market value to transfer from one account to another. For example, if a hacker gains control of a user’s account through deceptive techniques, they cannot withdraw money directly from a compromised account and will often use this type of tactic. However, this also seems quite unlikely in this case because of the large amount of money.

Either way, BTC / USDS is currently the lowest volume trading pair on Binance. And if this use of stablecoins continues to decline, it may well disappear in the future.

About stablecoin USDS

USDS is a stablecoin that was launched a year ago by Stably. However, it’s market capitalization has halved in the first few months after launch, reflecting a lack of users. It is currently ranked 545 on CoinMarketCap. In contrast, stablecoins like Tether have witnessed a sharp increase in market capitalization recently.

Source: Coinmarketcap

Disclaimer: This is not trading advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

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