Two major crypto exchanges, Coinbase and BitMEX, experienced flash crashes in March, highlighting the fragility of the crypto market. Experts explain that flash crashes are driven by factors such as low liquidity, market fragmentation, and the lack of circuit breakers.
Causes of Flash Crashes
- Low liquidity and market fragmentation
- Lack of circuit breakers
- Bad actors trying to manipulate prices
- Large sell orders
Impact on the Market
- Flash Bitcoin price dropped 17% from a new record this year
- Ethereum slumped 1.1% in the same period
- Flash crashes are relatively common in crypto markets
Regulatory Response
- US laws mandate circuit breakers for stock exchanges to stem panic-selling
- Crypto exchanges are not regulated and have not anticipated the full impact of flash crashes
- Experts call for the implementation of circuit breakers in crypto markets
Key Takeaways
- Flash crashes are a normal feature in crypto markets due to low liquidity and lack of regulation
- Experts call for the implementation of circuit breakers to manage flash crashes
- The crypto market is still evolving and fragile.Visit Us for
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