A Bitcoin flash crash is a rapid and severe decline in the market price of BTC, typically triggered by large sell-offs from major holders (whales). These events highlight the volatility risks associated with Bitcoin, despite its growth into a multi-trillion dollar market. Factors contributing to flash crashes include liquidation of leveraged positions, algorithmic trading errors, low market liquidity, technical glitches, and panic selling during negative news. These instances can create exceptional buying opportunities for prepared investors, as well as serve as stress tests for markets. For instance, on March 18, 2024, BTC’s price dropped from over $60,000 to $8,900 on BitMEX within minutes, before recovering quickly. The article explains how to protect yourself during such crises by setting alerts, avoiding excessive leverage, using stop-loss orders, keeping reserves, and not storing most holdings on exchanges. Flash crashes are often sudden, leaving little room for response, but understanding them can help investors navigate the tumultuous crypto environment.

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