Bitcoin (BTC), which crashed to $8,100 on October 21st, was only available if you were trading on Binance.US, Binance.US’s dedicated United States exchange.
Binance.US printed a one minute candle on Oct 21st that dropped BTC/USD by 87%. It took the USD/BTC from $65,815 down to $8,200.
“Shouldn’t be happening”
The one-minute BTC/USD candle, or what traders refer to as a “scamwick”, was dramatically different from other major exchanges that had logged a one minute candle with a floor of approximately $64,200.
This phenomenon is more common in recent times, with Bitstamp also experiencing freak order-book events.
However, the market participants were not surprised by the extent of the Binance.US error.
Popular Twitter trader Crypto Chase summarised: “Well done Binance U.S.
“It’s a good thing that Americans are forced to go to these dogshit exchanges, where they can be completely conned on ridiculously thin books. This kind of shit shouldn’t be happening. It is unfair that some people get stopped and others stay in, get filled and some don’t.”
BTC/USD 1-hour candle charts (Binance). Source: TradingView
Crypto Chase was a term that referred to the consequences of sudden price movements on exchanges. These serve to liquidate traders who should not have lost their positions.
Ironically, the debacle came just as Binance CEO Changpeng Zhao (also known as CZ) warned of incoming volatility.
He tweeted, Oct. 21, “Expect very high volatility crypto over the coming months.”
In a long-term market, leverage builds
On Oct. 21, there were concerns that leveraged traders may have taken on too much risk.
Related: Bitcoin futures ETF reaches $1B AUM in record-breaking 2 days
An examination of funding rates across exchanges suggests excessive optimism. This is evident when traders are buying BTC in large numbers — a classic indicator that there has been a correction.
After BTC/USD reached its all-time high, funding rates saw a significant increase and went on the reach $67,100.
Chart of Bitcoin funding rates. Source: Bybt