Bitcoin Crashes Over 85 Percent on Binance U.S. Platforms
Bitcoin fell more than 85 percent on the Binance platform early on Oct. 21, 2021, but only on the U.S. platform.
Oct. 21 2021, Published 2:40 p.m. ET
In the span of one minute, Bitcoin crashed more than 85 percent on Oct. 21, 2021. However, it was only on Binance’s U.S. platform, and the token didn’t actually fall that much. Bitcoin reached an all-time high on Oct. 20, surpassing $66,000. The coin was fluctuating around $65,000 on Oct. 21 and then dropped to around $64,000, but on the Binance.US platform, the cryptocurrency fell to nearly $8,000.
The price movement happened in a one-minute candle, and Binance has yet to explain why the coin fell so far. The Binance has seen some mysterious activity before. When the crypto crash occurred in May 2021, Binance was one of the platforms to go offline. The platform’s outage caused many users to lose significant amounts of money, as they weren’t able to withdraw their crypto holdings.
Why Bitcoin fell so much on Binance
Scam wick
While Binance has yet to publicly state what caused the price to fall, many people in the crypto community are leaning toward market manipulation, specifically a scam wick.
A scam wick is when an entity intentionally places a trade well outside of what the current trading range is, giving them the power to manipulate a price in a certain direction. When the entity places a significant trade that’s outside the common trading range, it triggers the stop loss of regular retail traders.
This causes trades to be executed in the direction of where the malicious entity wants it to go. Scam wicks on a candle chart will consist of a candlestick with a very long wick and a short body, as the wick represents where a price was fluctuating before it closed back up or down on that candle.
Scam wicks can be caused by entities such as market makers or whales, traders who hold significant amounts of a certain cryptocurrency. In the Binance.US situation, it wouldn’t make sense for a whale to be responsible for the drop in Bitcoin, as the price of the coin didn’t actually fall that much and it only happened on Binance’s platform. So, it could have just been an error on Binance’s behalf.
Fat finger error
A fat finger error in crypto is when an individual, such as a market maker, makes an error when conducting some type of action on an exchange. The error can be as simple as pressing a wrong button or misclicking somewhere. These types of errors have happened multiple times this year.
In Sept. 2021, Bitfinex was paying a gas fee of $33 in Tether to a miner but accidentally sent over $24 million. It's not the first major issue Bitfinex has dealt with, either—hackers stole over $72 million in Bitcoin from the exchange in 2016. The stolen funds are still being moved around.