CHICAGO (BLOOMBERG) - Another day, another major snafu in cryptocurrency trading.
The price of Bitcoin rapidly plunged by about 87 per cent on Binance's US exchange on Thursday morning (Oct 21), sinking to as low as US$8,200 from around US$65,000. The price did nothing like that on other venues and on Binance, the level almost immediately snapped back to where it had been.
"One of our institutional traders indicated to us that they had a bug in their trading algorithm, which appears to have caused the sell-off," Binance.US said in an e-mailed statement. "We are continuing to look into the event, but understand from the trader that they have now fixed their bug and that the issue appears to have been resolved."
The plunge occurred at 7.34am New York time (7.34pm Singapore time), according to the Binance.US website. Volume on the exchange in that minute was 592.8 bitcoins, which is worth just shy of US$40 million (S$54 million) at current prevailing prices.
Mistakes like this happen throughout finance when, for instance, traders mess up details of their intended trades, entering the wrong price or order size. An erroneously large trade, as one example, can overwhelm an exchange's order book, leading to a quick and massive decline.
The entire United States stock market famously flash crashed back in May 2010, though equities have mostly avoided trouble since that era.
This is the latest in a string of recent high-profile trading problems in crypto.
Synthetify, a new decentralised exchange, was forced to shut down for a while earlier this month shortly after its debut because of bad data provided by the Pyth Network, a price feed backed by some of the world's most well-known trading and exchange firms.
Pyth malfunctioned another time in September, erroneously making it appear that Bitcoin had crashed 90 per cent.