Bitcoin prices rise to $50,000 on Binance after USD coin plug clicks
The panic caused by the USD Coins (USDC) depeg from the US dollar manifested itself in the wrong order, costing traders $50,000 per Bitcoin (BTC), albeit for several minutes.
Bitcoin price sees $50K in ‘fat finger’ error
The BTC/USDC pair on Binance flash rose to $50,000 on March 12 around 19 UTC. The reason for the impulse spike is unknown and was probably due to a “fat finger” trade of a large order.
The potential cause of the flash spike is likely thin order books for the recently launched BTC-USDC pair on Binance. The exchange listed the pair just a few hours before the impulse price rise.
According to a trader on Crypto Twitteris it likely that a Bitcoin market order ate through the limit sell orders on the pair up to $50,000.
The pair traded back towards the market spot price of around $22,000 within a minute of the peak, suggesting this was an isolated event. Fortunately, the futures market remained unaffected by the spot BTC-USDC pair; otherwise it could have triggered massive short-side liquidations.
But this isn’t the first time cryptocurrency exchanges have seen flash crashes and spikes. Several exchanges recently had similar problems, sparking anger and refund requests from affected customers.
Related: Deribit to Pay Users $1.3M After Bitcoin Price ‘Flash Crash’ to $7.7K
In August 2017, a flash crash on GDAX caused ETH prices to plunge to as low as $0.1 due to a customer error. Ether was trading around $300 at the time.
USDC stablecoin peg recovers
USDC’s value fell to $0.87 on March 11 after Circle, the issuer of USDC, disclosed that it had a $3.3 billion exposure to the defunct US bank, Silicon Valley Bank.
USDC trading pairs have been volatile on other exchanges since the SVB revelations. On March 11, the BTC/USDC pair on Kraken surged above $26,000 on fears of the collapse of USDC.
At the time, USDC was trading at a 10% discount, which would have priced Bitcoin at around $22,200. However, the peak towards $26,000 indicates that panic is causing severe volatility.
The fear intensified during the weekend due to uncertainty about the fate of the depositors in the SVB bank. In response, the US Treasury, Federal Reserve and FDIC decided to bail out the customers of SVB and Signature Bank, but not the shareholders and other stakeholders, restoring market confidence in the meantime.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
