Bitcoin [BTC] went haywire on 31st October on a couple of exchanges as price dipped to as low as $7700. The reason has been attributed to the maintenance shutdown of Coinbase Pro during 21: 00 hours UTC when the drop was witnessed.
Deribit Exchange was the most affected by this.
Screenshot of Flash Crash at Deribit Exchange (Source: Tweet)
The most bizarre situation was seen at BTSE as it recorded a $15000 wick followed by a melt-down to $6500.
Am I missing anything? #bitcoin
— sicarious (@Sicarious_) October 31, 2019
Coinbase price recorded a gap of $50 on the hourly chart as the abnormality crept in the price.
BTC/USD 1-Hour Chart on Coinbase (TradingView)
The long/short ratio on Okex vividly describes the shift in market sentiments that occurred following the break. It has formed a cup with revival seen in the past few hours.
Bitcoin Futures and Perpetual Swaps Long/Short Ratio on Okex
What Caused the Drop Manipulation or Inefficiency?
The bots and the algorithm are to blame for the event. The pricing model of most exchanges is inter-dependent. Hence, a shut-down or malfunctioning of one creates ruckus in the other as well. However, the exchanges must be prepared for such events.
According to Su Zhu, the CEO of Three Arrows Capital and research lead for Deribit Exchange,