12.04.2021

Bitcoin Price Slides 2% After Deribit, Coinbase Flash Crash

Crypto trader @Crypto_boy1 took to Twitter to slam Deribit for telling customers that trades would not be rolled back and that they should manage positions accordingly.

Another flash crash has occurred for bitcoin (BTC), this time appearing on the Coinbase Pro and Deribit exchanges.

At 19:55 UTC on Oct. 31, BTC’s spot price dipped from $9,260 to $9,055 in quick succession on Coinbase’s exchange for professional traders.

An hour later, Deribit, a futures and options exchange for BTC, saw futures prices drop from $9,150 to $7,720 before bouncing back above $9,000 within minutes.

The move caught traders unawares as multiple orders were executed in the process.

“It’s over. I would withdraw all funds and never use this exchange again If I was a user” he said.

5-minute chart

As seen above, BTC dropped to a low of $7,720 on Deribit, sending shock waves throughout the derivatives market. Liquidations shot through the roof on Bitmex, for example.

However, in an official response on the same thread, Deribit said it would attempt to rectify the incident by changing the price of stop-loss trades to a fixed BTC level, depending on the product.

“Equity will be brought back to the pre-incident level, around index price $9,160”, the exchange said.

5-minute chart

An hour before Deribit’s incident, Coinbase Pro users also experienced problems as stop-loss orders were “deleted” right before BTC’s sharp drop from $9,260 to $9,055.

According to a user of CoinDesk’s Dojo trading forum who goes by the handle Radyohead, the price dropped below their stop-loss order, yet no sale was executed:

“Coinbase crashed as far as I can see. And it deleted my Stop Loss as it happened, nothing sold for me despite the price being lower than where my stop was.”

Prices have since rebounded, currently changing hands for $9,145, while the issues on both exchanges appear to be resolved.

Bitcoin Fails at Key Price Hurdle, Risks Return to $8,000

Bitcoin is facing further losses after the bulls failed to capitalize on price gains seen this week.

The cryptocurrency’s quick pullback from a 2.5-week high of $8,830 to below $8,400 this morning has invalidated a bullish breakout on the 4-hour chart seen Wednesday, as seen below.

4-hour chart

The failure to hold above the 200-day moving average (MA) at $8,654 has also weakened the bullish outlook on the daily chart and may have shifted risk in favor of a drop to $8,000 in the next 24 hours.

Daily chart

Bitcoin crossed the 200-day MA in the Asian trading hours on Friday and jumped to highs above $8,800, as expected. The breakout was short-lived, however, and prices fell from $8,820 to $8,356 in the 60 minutes to 06:00 UTC.

The failure to hold above the long-term average – a barometer of the long-term trend and a level which has acted as stiff resistance over the last two weeks – may embolden sellers, possibly leading to the deeper slide to $8,000.

A daily close above the 200-day MA is needed to revive the short-term bullish setup.

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