What made this flash crash so bad compared prior ones.
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I think we can all agree the market overreacted yesterday when Bitcoin flash crashed a $10k loss in minutes and alts flash crashed 50-75% losses and some even flash crashed 99.9% (atom on Binance). In fact it was so bad it was nearly 10x worse than the prior worst liquidation event in history which was FTX. With total leverage losses over $19B All this raises some post mortem questions of why.
It's no secret that an OG BTC whale opened a short at 120.5 BTC the day before the dump, and added onto it minutes before the flash crash. So was there inside trading an manipulation, probably. It's on par for the current political climate. So I'm sure this had something to do with it. Post ATH retrace? Given the fact that Bitcoin at least had a recent ATH leading into a low volume weekend. It would be reasonable to expect some amount of cool down on Thursday/Friday. Over Leveraged Markets? This absolutely played a role in it. The market have not had a significant down turn for longs on BTC for months. For months btc was bouncing between 108k – 120k. There were a ton of longs in the market and besides paying funding fees they were mostly all relatively healthy before Friday morning.. Increased access to leverage? The current us administration did something that no one else had done for Americans by allowing leverage trading to all traders at CEXs. Although it was capped around a mere 10x, that obviously wasn't sufficient for any meaningful market downturn (especially alts which have limited liquidity). This recent change meant ALOT more retail degens had easy access to get wiped using leverage. Pumptober believers could have played a part as the pumptober narrative had been spreading hard before the early October run up, and pumptober believers would be unanimously long. ——————– Why else do you think this market action was so bad? Obviously this isn't a complete list but it's a good list to get started. submitted by /u/GabeSter |
