Newsflash: Bitcoin Price Crashes to $6,400 Triggered by Massive $35 Million Sell Order
Bitcoin price just dropped nearly 18 percent. | Source: Shutterstock
By CCN: 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.
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.
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,