Binance.US attributes the $8,200 bitcoin flash collapse on a fault in a client’s trading algorithm

US attributed a flash collapse in its arena to a trading algorithm used by an institutional customer. However, traders express astonishment that more robust processes were not in place.

Earlier morning, bitcoin’s price saw a flash collapse to $8,200 on cryptocurrency market Binance.US – a drop of 88 percent in a matter of seconds.

Binance.US said in an email to The Block that the flash crash was caused by a flaw in one of its customers’ trading applications. “One of our institutional traders informed us that their trading algorithm included a flaw,” the business said.

According to Binance.US, the trading business has resolved the problem. “While we are still investigating the occurrence, we have been informed by the trader that they have corrected their problem and the situation looks to be resolved,” the business added.

Sources from traders The Block talked with many individuals who expressed amazement at the occurrence. They said that most trading organizations have mechanisms in place to prevent this kind of situation. These systems automatically shut down when specific circumstances are satisfied, such as when an excessive amount of money is lost on a transaction or when the price utilized in a deal is significantly different from the optimal price.

Exchanges are also often equipped with this kind of technology. Coinbase, for example, has added what is known as price protection measures. If an order attempts to fill outside the specified parameters, the engine will cancel it.

“If a Market or Limit Order is filled against Orders that exceed the PPP, the Order will partly fill up to the PPP level and the matching engine will cancel any remaining sections of the Order,” the company’s website states. Coinbase did not experience a bitcoin collapse.

The flash collapse on Binance.US has an effect on the overall market price of bitcoin. The price immediately declined from roughly $65,500 to $64,200 on other major exchanges. Despite a brief rebound, it has not recovered to pre-crash levels and has continued to fall, now trading at $63,100 at the time of publishing. Bitcoin sank to $58,555 elsewhere, while it was considerably lower at $51,410 on FTX.US.

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