Yesterday, a surprising event took place in Binance US, when the price of Bitcoin briefly dropped below $10,000.
While this anomaly was quickly fixed, it had a far-reaching effect on other Exchanges as Exchange Kraken also saw the value of Bitcoin drop to around $54,000 and Coinbase saw the price drop to around $1,000.
Ethereum’s price hike was also briefly reduced as the asset lost up to 50% of its value, in some cases where it traded for $2,000 after crossing the $4,000 mark.
Interestingly, Changpeng Zhao, CEO of Binance, had previously posted a tweet warning cryptocurrency traders, asking them to “Expect high volatility in cryptos over the next few months.” Shortly after his tweet, Binance US saw the price of flash drop.
Binance explains why
Talking about why this happened, Binance US sent an email to Bloomberg, revealed that the flash crash was caused by a bug in one of their institutional trader algorithms.
One of our institutional traders indicated to us that there was a bug in their trading algorithm which appears to have caused the liquidation. We continued with the investigation of the event, but we understand that they have now fixed the bug and that the issue appears to have been resolved.”
So far, it remains to be seen whether any of the Exchanges suffered losses from the brief drop in asset prices.