A flash drop of 87%! Bitcoin had a “horrible night”. What happened?

Bitcoin, which once broke through the record high of $66,000, is now only $8,000 on Binance US?

Some netizens said that they didn’t get the $8,000 leak, but they were satisfied with buying it at $23,000. But for the holders, if they set a stop-loss order, they may be forced to close their positions and face the unexpected disaster of huge losses.

Last night, Bitcoin experienced a shocking drop on a trading platform:

On October 21, the one-minute candle chart on the Binance US trading platform showed that its price fell from $65,815 to $8,200, a drop of 87%. On other trading platforms, the price during the same period was about $64,200.
In that minute, the exchange traded 592.8 bitcoins, worth just under $40 million at current prices. Subsequently, the price of bitcoin quickly rebounded to the level before the flash crash.
It is understood that due to the different supply and demand relationships between large and small platforms, the prices of Bitcoin and other cryptocurrencies are different on different exchanges. Bitcoin does not have a fixed pricing method, so this flash crash did not extend to affect the prices of other platforms.
Is it an erroneous order or quantitative trading?
The platform said: There are loopholes in the institutional algorithm. This kind of flash crash not only reminds people of various "wrong orders" that have occurred in history. When traders get the details wrong, such as entering the wrong price and order size, it will cause a market flash crash, such as the flash crash in the US stock market in May 2010.
One netizen said that Binance’s US platform does not have margin trading now and is a pure spot market. At that time, a large number of sell orders triggered a chain reaction, causing a large number of currency holders to stop losses and leave the market, resulting in such a large price fluctuation.
In response, Binance explained that there was a loophole in the trading algorithm of an institutional trader on the platform, which seemed to have led to the sell-off. Binance US also said it was continuing to investigate the matter, but the trader has now fixed the error and the problem seems to have been resolved.
Currently, the Bitcoin trading price on the platform has recovered to about US$63,000, with a change of about 3% in 24 hours.

Binance founder Zhao Changpeng tweeted the day before, "Indicating that the volatility of cryptocurrencies will be very high in the coming months." Immediately afterwards, a netizen left a message below, saying, "Are you talking about Binance US?"
After the clarification was issued, there were still criticisms from the outside world, pointing out that some trading platforms usually have circuit breaker-like designs to prevent this situation from happening. In extreme cases, transactions can be automatically locked to avoid affecting market prices and prevent price fluctuations from becoming larger.
For example, the Coinbase exchange has so-called price protection. If the limit order price exceeds the reasonable range after the order is placed, the trading platform will automatically cancel the transaction to avoid market collapse.
Lack of regulation makes exchanges unreliable. A senior trader on the Internet lamented: "This shouldn't happen. Some people have their positions liquidated, some can continue to hold their coins, some get compensation, and some don't. This is unfair."

In fact, due to the lack of supervision, trading platforms have the final say in rule-making. Some netizens said that the platform can modify trading rules at will, and in the past, purchase transactions in some extreme cases were deemed invalid. One netizen showed a situation in which he bought Bitcoin at a very low price in 2019 but did not cash it out.

In February this year, a low-price transaction of 300,000 Philippine pesos occurred on the Philippine trading platform PDAX. At that time, the transaction price was only about US$6,000, while the market price had exceeded US$50,000.
But later the exchange explained that it was not based on blockchain transactions, so the transactions did not count, and even asked users who received Bitcoins to return them, otherwise the trading platform might take legal action.
Investors' enthusiasm for Bitcoin has not subsided: the first Bitcoin ETF (BTIO) in the U.S. market was listed, and it has attracted more than US$1.1 billion in trading in just two days. The trading volume on the day of its release was US$1.008 billion, making it the second highest ETF in recorded history, and the subsequent trading volume continued to rise.
The market is unprecedentedly enthusiastic about Bitcoin, but the lack of regulation in transactions and its own volatility risk are still the biggest problems facing Bitcoin. Some analysts believe that this "glitch", whether accidental or premeditated, will greatly weaken the upward trend of cryptocurrencies.