A Bitcoin flash crash is a sudden, sharp decline in BTC's market price that lasts briefly before stabilization. This event often results from large sellers flooding the market, overwhelming buyers, and erasing significant value. Factors like the liquidation of leveraged positions, algorithmic trading errors, low liquidity, technical glitches, and panic selling during negative news can trigger these crashes. Despite the negative impacts, flash crashes may present buying opportunities, test market resilience, improve industry practices, and lead to increased investor protection. Notable flash crashes occurred in June 2011 and March 2024, significantly affecting prices across major exchanges. To mitigate risks, investors are encouraged to set price alerts, use leverage cautiously, employ stop-loss orders, maintain spare capital, and avoid keeping large holdings on exchanges.

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