Bitcoin tumbled mightily Wednesday morning after a whale exited a hefty position. The ensuing panic from traders tanked the crypto 12% in four minutes.
As Bitcoin nosedived more than $1,000 in minutes Wednesday, not only did it freak out traders, but it also took a toll on the exchanges, which crashed under the heavy volume that came their way.
Among the exchanges that reported problems were Coinbase, which is considered the world’s most funded exchange. Observers say it literally crashed, along with Gemini, during the early morning hours on Wednesday.
Problems arose with other exchanges, too, as users reported being locked out of accounts on GDAX and Bitstamp.
Another interesting development about the crash were reports that a whale was the reason for the first flash crash in months.
Sailing to highs and then, bam!
Bitcoin had been trading well through the morning hours Wednesday, and had even set an all-time high of $11,441. A report is that a Bitcoin trader apparently set Bitcoin’s price resistance at $11,500, which was within striking price of their $11,400 target to exit. As that price approached, that person put in a sell order, sparking Bitcoin’s fall to $10,075.
The roughly 12% drop in Bitcoin’s value was clocked at happening in just four minutes.
Exchanges were faced with overwhelming volumes as traders moved in response to the fall. Users encountered a host problems including slow performance and not being able to log into their accounts.
Those trying to log in at Coinbase were greeted with a message that said "partial system outage."
Gemini’s users were treated with the detested a "504 gateway time-out" message. Gemini officials soon posted: "Systems are currently experiencing degraded performance."
By the afternoon (Eastern Time) the problems seemed to be over, and so was Bitcoin’s plummeting. It had begun its rebound, after falling as low as $9,200 during the day.
Wednesday’s price volatility panicked new traders, and surprised those who’ve traded the crypto for some time. Many had grown accustomed to the upward, no turning back, trajectory Bitcoin has been on all year.
It must be remembered that such exaggerated up and down price moves are inherent to Bitcoin, but the overall trend has continued to be bullish.
As new traders, especially from the mainstream, continue to be drawn to cryptos, the potential for more volatility could also continue to increase.
Iqbal Gandham, managing director at eToro, said:
“While the price volatility in bitcoin leads some commentators to assume we’re in a Bitcoin bubble, the reality is that emerging technologies carrying radically new ideas will always see swings in their value before their potential is fully realized and the price stabilizes.”