Bitcoin Currencies News & Updates

BREAKING: Bitcoin Flash Crash on May 17th!

On May 17, within minutes, the bitcoin price plummeted from around $7,800 to $6,400 in a #flash #crash, recording an unexpected 18 percent #drop.

bitcoin price drops to $6,400

The bitcoin price briefly plunges to $6,400, recovers swiftly (source: coinmarketcap.com)

The sudden decline in the #bitcoin price led the valuation of the #crypto #market to #plunge from $257 billion to $225 billion, by more than $32 billion in less than 24 hours.

WHAT TRIGGERED THE SUDDEN BITCOIN PRICE DROP?

According to researchers and investors including Su #Zhu, the #CEO at Three Arrows #Capital, and Eric #Conner, a product developer at #Gnosis, the bitcoin price plummeted as soon as a several thousand bitcoin sell order was placed on #Bitstamp.

Zhu said:

BitMEX wicked down to $6,400. 2,000 BTC+ sell wall on #Bitstamp absorbed. Looks like a #mark price exploit by placing a large #sell on stamp (1 of 2 oracles for mark on #BitMEX) to trigger #liquidations on BitMEX. You would’ve been fine on lvg long on #Bitfinex which didn’t go below $7,000.

Speaking to CCN in an exclusive #interview, Zhu explained that #investors may have taken #advantage of the Bitstamp API, which then led contracts on #BitMEX to become liquidated as the #bitcoin price plunged.

“Bitstamp API issues I heard. Some #bug where people getting filled on prices above their buys. This is used on leveraged #products as mark price, hence triggering #liquidations on BitMEX,” Zhu told CCN.

Conner suggested that the sell order on #Bitstamp that led to #BitMEX #liquidations may have been larger than 2,000, likely around 5,000 BTC, worth more than $35 #million.

“For reference someone put a 5,000 BTC sell on Bitstamp, which BitMEX uses for 50% of its feed and it appears to have tripped some algorithms which made a cascade on BitMEX,” Conner said.

Following the 18 percent drop in the #bitcoin price, traders have become more #cautious about the short-term trend of the #market.

One trader said that he expected the #market to absorb sell orders considering the positive #sentiment around the #crypto#market in recent weeks. But, the #market did not show a large buy back the trader anticipated.

“Hate to be that #guy, but I’m not seeing the buy-back I was really hoping to see on #BTC just yet. Objectively, this looks like a #bear #flag, and if I was looking for a long #entry, I’d want to wait until we test $200 billion,” the #trader said.

WILL MARKET RECOVER?

Zhu noted that given the recent price #action of bitcoin and other #crypto #assets is a result of a market structure related move, he expects the #market to recover relatively quickly in the #near-term.

“This is a purely market structure related move, I expect it to be bought up #extremely quickly,” he said.

Josh Rager, a #cryptocurrency trader, also emphasized that the #gap between the #CME bitcoin futures market closing and the #surge in the price of bitcoin last week has been filled, indicating a #positive #trend for the #market.

Josh Rager 📈@Josh_Rager

– CME Futures Gap officially filled

Looks like that was the dip to buy

This is very bullish

148 people are talking about this

It remains unclear whether the #absorption of a #multi-million dollar sell order on May 17 would act as a roadblock in the short to #medium term trend of the #crypto#market.

In recent weeks, the real 10 #volume of #bitcoin, which estimates the #legitimate #daily spot volume of the dominant #cryptocurrency, hovered at around $1.9 billion, up more than six-fold since March.

If the volume of the #market sustains, there exists a strong #possibility that the market stabilizes subsequent to the sell-off, as #Zhu suggested.

In the long-term, the prospect of the crypto market still remains positive. At #Consensus, TD #Ameritrade executive vice president Steven #Quirk said that more than 6,000 clients of the #institution traded something in the crypto #market.

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