Cryptocurrency
Is This The Real Reason Behind Bitcoin’s Huge Weekend Flash Crash?
Forbes reports, “Bitcoin volatility is back. After months of relative stability the bitcoin price ricocheted this weekend, rapidly losing and gaining over $1,000 in mere minutes. “Bitcoin’s Sunday morning flash crash was initially attributed by some to so-called ‘whales’ who control large amounts of bitcoin moving the market, however others have now suggested it could be due to […]
Forbes reports, “Bitcoin volatility is back. After months of relative stability the bitcoin price ricocheted this weekend, rapidly losing and gaining over $1,000 in mere minutes.
“Bitcoin’s Sunday morning flash crash was initially attributed by some to so-called ‘whales’ who control large amounts of bitcoin moving the market, however others have now suggested it could be due to ‘algo misbehavior.’
The bitcoin price broke $12,000 per bitcoin early Sunday morning only to plummet 12% to $10,500 within the hour before bouncing back to over $11,300 almost immediately.
“‘Such spikes are still inherent to the crypto market structure, with prolific unregulated leveraged trading going on,’ Anatoliy Knyazev, the chief executive of brokerage Exante, said via email, adding the flash crash ‘could be a case of an algo misbehavior.’
“Algorithmic trading is used to automate trades based on time, price, and volume with traders programming buy or sell orders to happen when certain market conditions are met, such as an asset price reaching a particular level or if it sharply falls.
“The effects of algorithmic trading can be exacerbated by leveraged trading, allowing traders to take larger positions with smaller amounts of capital—something that is now being offered by many of the biggest bitcoin and cryptocurrency exchanges…”