BinanceUS Blamed the 87% Bitcoin Flash Crash on Algorithm Bug
The US branch of the leading cryptocurrency exchange explained that yesterday’s severe flash crash that saw BTC’s price dumping from $65,000 to $8,700 in mere seconds was because of a bug in the trading algorithm.
- CryptoPotato reported yesterday when the price of bitcoin nosedived from its near all-time high level to below $10,000 on Binance US.
- Other trading platforms, such as Kraken and FTX, also saw flash crashes as BTC dropped more on those two exchanges than it did in reality.
- Although these flash crash events do occur from time to time, an 87% drop (the one on Binance US) is something that caught the attention of the public.
- The company decided to explain what happened in a letter shared with Bloomberg. It reads that the problem came from an algorithm bug.
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“One of our institutional traders indicated to us that they had a bug in their trading algorithm, which appears to have caused the sell-off. We are continuing to look into the event but understand from the trader that they have now fixed their bug and that the issue appears to have been resolved.”
- A flash crash is an event in which the price of the underlying asset falls hard before it immediately recovers to its previous levels.
- It could be particularly damaging to traders using leverage as it can liquidate their positions in an instant.
- Another recent one in early October saw BTC dropping by several thousand dollars once more on Bitstamp following a massive sell order of over 210 bitcoins.
