Bitcoin-Euro Flash Crash: Brief Disparity, Recovery

This occurred after Bitcoin reached an all-time high but quickly depreciated against the euro on Coinbase.

Ten minutes passed before Bitcoin (BTC) and euro trading combinations on other exchanges returned to parity.

Flash crashes are commonly ascribed to insufficient liquidity or a transaction involving a “fat finger.”

On Tuesday, Coinbase (COIN) and BTC depreciated 23.7% against the euro amidst a period of intense volatility that ensued after the cryptocurrency reached an all-time high of $69,325.

Bitcoin experienced a brief decline in value from €60,000 to €48,529 on Coinbase; however, the price did not fall any lower than €58,400 on Kraken.

The cause of the flash collapse is still unknown, and the price did not return to parity with other exchanges for ten minutes.

Flash collapses are commonly associated with several circumstances, including inadequate liquidity.

This occurs when the quantity of market sell orders exceeds the quantity of resting buy orders on the order book, causing the price to descend to the nearest point where adequate bids are available.

Factors Behind Bitcoin Flash Collapses

Another factor contributing to a flash collapse on Binance.US in 2021 was a trader or algorithmic error or bug, commonly called a “fat finger” trade.

The discrepancy between euro trading pairings emerged shortly after bitcoin reached a record high in U.S. dollars (69,325) and subsequently reversed those gains within minutes, briefly falling below $64,000.