Baisakhi MishraOn Binance’s US market Thursday morning, the price of Bitcoin plummeted by 87 percent, dropping to as low as $8,200 from approximately $65,000. On other exchanges, the price did not behave in the same way, and on Binance, the level almost soon returned to where it had been.
Binance.US said in an emailed statement that “one of our institutional traders revealed to us that they had a flaw in their trading algorithm, which appears to have caused the sell-off. We’re still looking into the incident, but we understand from the trader that they’ve rectified their bug and the problem looks to be resolved”.
According to the Binance.US website, the drop happened at 7:34 a.m. New York time. The exchange’s volume at the time was 592.8 Bitcoin, which is worth a little under $40 million at today’s values. Binance is the world’s largest cryptocurrency exchange, and it is based in Binance. Although it is still prohibited in numerous places, US exchange is designed to comply with US legislation.
Image Source: Bloomberg.com
Traders make mistakes like this all the time in finance, for example, when they enter the wrong price or order size for their intended trades. For example, an erroneously large trade can overload an exchange’s order book, resulting in a rapid and enormous fall. Although the whole US stock market famously flashes collapsed in May 2010, equities have largely avoided problems since then.
This is the most recent in a long line of high-profile cryptocurrency trading issues. Synthetify, a new decentralized exchange, was forced to go down for a period of time earlier this month, shortly after its launch, due to inaccurate data provided by the Pyth Network, a pricing feed endorsed by some of the world’s most well-known trading and exchange organizations.
Pyth malfunctioned once more in September, giving a false impression that Bitcoin had dropped 90 percent. On September 20, the Pyth Network went down, reporting a Bitcoin price of $5,402 on a day when other sources, like as CoinGecko, didn’t show a BTC price below $40,000.
It wasn’t the only blunder. Pyth’s price feed for AMC’s shares indicated a rise to $772 on September 15 and 17, a huge difference from traditional data providers like Yahoo Finance, which didn’t show AMC’s stock rising more than $50 on those days.
Pyth’s DOGE feed likewise indicated a price of $0.88 for 11 hours on September 15, a day when CoinGecko never reported a price of $0.25 or above for DOGE.
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