Topic: Binance.US takes price 87% down (Read 200 times)

This is not the first time these kind of mishaps happened in Binance, whenever there is a rally or a correction, you will see some kind of fishy bug in their platform and then blame and this happened in their liquidity market as well and many lost huge amount of money and will they be compensating everyone who lost money. I have no idea how they are handling all these.

Even if someone purchases at lower valuation, they would not allow to withdraw citing it was a bug, but i am yet not clear what happens to users that lost big amount during these situation.

That bug definitely makes the case for having standing buy order well out of the money.  I've seen this happen several times in my trading career with different equities.  I've never managed to catch one, but have tried.  It's just hard to keep dry powder sitting locked in out of the money orders, but in this case it proved to be extremely profitable. 

Last time I saw something like this happen in Bitcoin was back in the summer of 2011 when mtgox crashed the price down to pennies and then rolled back all the trades (I lost several hundred BTC as a result of that rollback).  At least the market has matured to the point where a rollback like that would be considered insane. 

There's another thread on it created yesterday and I had posted there. You can follow the reddit discussion to get the insight- https://www.reddit.com/r/BinanceUS/comments/qcql1a/what_just_happened_here/
There were few more altcoins which saw such low price yesterday. It was said by Binance that due to a bug with their institutional trading algorithm, this happened. Not sure how much true it is- https://www.bloombergquint.com/onweb/bitcoin-appears-to-crash-87-on-binance-in-apparent-mistake
Here's my post on another thread-

They removed it immediately, and probably there's other intentions about that long weak tail wherein just a bug because so far there's no complaints when it comes liquidited accounts because just imagine that drop, wherein if you buy from the top for sure your capital will be vanished in just 10 minutes especially if you're a small trader.. And you know there's no complaints as well from those who set stop loss.  So probably just a normal bugs that always occur even in some exchanges..

Well that's what I'm contemplating and looking for valid information from Binance.US, how within one minute the price of Bitcoin is dumped in a short period of time and back up again. Of course, this is an act that is indeed a form of undetected bug that will be detrimental, including people who had entered the price.

Since this is caused by the bug Binance have all the right to revert all the trades happened with the wrong prices so no one is going to be actually lucky at this scenario. Binance may look up into what caused the bug and will try to keep their platform bug free so they can ensure this won't happen in the future.

I also saw this news today about this exchange and that's one of the hundred reasons people saying to better also place stop-limit orders to avoid getting trapped in situations such as this one. Its is not the first time this happening to an exchange, I remember months ago this happened to another exchange and some people could buy bitcoins for a very cheap price however the exchange toke back the bitcoins, as far as I know this usually happens due to lack of liquidity to any exchange.

sure .. those people that being liquidated would never accept any excuses.

its pure unacceptable , and for those people who lucky enough to have their impossible buy order at such low price would feel like getting a jackpot in a slot machine, just like my personal experience putting buy order at c.cex exchange back in the days ... a shitcoin called positron or something  (i forgot the name) ... turning my $50 buy order into $600 is freakin something , thats the power what so called algorithm bug. beware of this shit perpetual trader.

Ethereum briefly crashed from $319 to 10 cents in seconds on one exchange after ‘multimillion dollar’ trade

The crypto market has some crazy crashes like that. The pain is price recovered quickly after crash and liquidation. You won't lose anything if you have a position in Spot trading or hold. You will lose most of capital, get debt or suicide if your position is liquidated and it is all money you have.

instead of a central exchange with millions of people all ordering from one orderbook, bitcoin is based on dozens of exchanges. meaning low volume per exchange. meaning thin 'walls'

so instead of the combined 1mill coins making thick walls to protect the price. dozens of exchanges offering dozens of different fiat/btc orderbooks weakens the walls yields.
binance, yes just binance alone doesnt just have one order book of say 100k coins for usd/btc. it actually has a few diluted books of usdT, usd, tether and other fiats of 'dollar' to btc meaning that on that certain USD/BTC book it only has combined order yield of like 600 coins protecting the price.

its allows for people with just a few coin to shift the price alot.

if we were in a situation where all exchanges were brokers for 1 central orderbook. where by the collective value was 1mill+ coins. then a user with 500 coins would not put a scratch in the price.

however the decentralised nature means that the particular small yield orderbook of binanceUS usd/btc means he did put a big sinkhole in that orderbook.

luckily though. the usual arbitrage bots that like to take advantage of this and replay the moves on other exchanges to shift other exchanges into the same motion, did not trigger. because if the did, even if there was no trader with a bug that inputed sell down to $8k trading on other exchanges. arbitrage bots woulda caused a ripple effect to cause a movement downwards just to stay inline with the exchange that had the incident.

so that has become a lucky good sign that exchanges are now becoming more decentralised and not so trigger happy to copy/paste order patterns across multiple exchanges

if this incident happened in say 2016, we would have seen many exchanges and their multiple fiat-btc orderbooks sheeple arbitrage react and follow the pattern causing the overal price of all exchanges to drop.

so lets be glad, that the recent event didnt cause cross exchange triggering of prices. but also lets take this as a learning experience that the yields of coin per orderbook is very light of coin. meaning very fragile to change prices easily with little coins.

where by. someone with say 5000 coin. could position themselves to spread their coin over 10 main notable orderbooks. and effect 10 orderbooks simultaneously to dip the price down vastly per exchange and force a trigger of the arbitrage bots of other exchanges to follow suit down.

learn atleast that although there are 18.85mill coins in the bitcoin network. there are not 18.85 mill coins protecting the bitcoin price. in this case binanceUS usd/btc only had about 600 coins in its orderbook listing down to $8k

I guess it was already cleared by the exchange itself? the Binance.US already said in the statement that the culprit of that incident is an algorithm bug. But besides that clarification, still many are not convinced, even me I smell something fishy about it. that incident was resulting in wide speculation and accusation, on behalf of the Binance.us exchange, they should act now if possible to compensate those traders then they must do it.   

It is not about who's the lucky guys to bought that the price cause in the previous time when issues like this happen all the trading executed during the time of the incident will be cancelled and if you read the rules and regulations of most centralized exchange site they usually include it.

It also happens to an Asian exchange probably Korea or Japan but I don't remember the exchange name. I don't understand why exchange sites experience these algorithm bugs during the bullish market.

One of best weapons in trading, stop loss order but it is not enough in crash like that one on Binance US.

To improve your safety, you can use Stop limit order
To be safest, use Spot trading with it you don't have risk of liquidation by market crash.

Looks like that Binance.US had some issues which caused the price to drown below 9k. I wonder who was the lucky guys buying at such low prices  It seems that this was not the first time an incident like this happen. Back in 2017, Coinbase saw the price of Ethereum being flushed down from $319 to 10 cents. Apparently, this also happened with Traditional Trading. So this may well be moves caused by exchanges themselves to access low prices.

https://beincrypto.com/algorithm-bug-crashes-bitcoin-8200-binance-us/

I would like to know what causes this sort of spikes and if this could happen again.