That huge red candlestick showing Bitcoin crashing 80% on BitMEX was not a bad dream.

Bitcoin (BTC) experienced a sudden and significant flash crash on the cryptocurrency exchange BitMEX late Monday. The price of BTC plummeted to as low as $8,900, a stark contrast to the prices on other exchanges, which remained steadily above $60,000.

The rapid descent began at 22:40 UTC, and within just two minutes, prices had fallen to their lowest level since early 2020. This abrupt drop was followed by an equally swift recovery, with prices rebounding to $67,000 within 10 minutes of the drop.

Image: @syq via X

Throughout this volatile episode on BitMEX's spot market, BTC’s global average price remained around $67,400. But the discrepancy has led to speculation among market observers about the cause of the crash.

Some social media users have suggested that the price crash was catalyzed by a large sell order, or "whale selling." According to one pseudonymous user, Syq, someone put a market sell order of over 850 BTC ($55.49 million) on BitMEX, driving the XBT/USDT spot pair down to $8,900. When someone “market sells,” the order is matched instantly by the immediate buying counterparty and keeps doing so until it is filled. If the amount sold is too large, this can cause prices to crash.

In response to the flash crash, BitMEX released a statement on social media.

"We are investigating potential misconduct by traders on our Bitcoin-USDT Spot market," the exchange tweeted, “the BTC sell orders this morning were simply too big and frequent for independent market makers and other traders to react to. As is standard, our compliance team is investigating the accounts and transactions triggering this price movement.”


BitMEX did not immediately respond to a request to comment from Decrypt.

The exchange added another tweet stating that it had temporarily blocked withdrawals for a select group of accounts involved in the investigation.

BitMEX gained prominence during the 2017 bull run as the world's largest crypto derivatives platform and has previously faced controversy. In recent years, the exchange found itself under scrutiny after the U.S. government accused its executives of violating the Bank Secrecy Act. Since then its popularity dropped, and it is now the 10th largest derivatives exchange by daily volume, according to Coinmarketcap

Despite BitMEX's assurances that the incident had no impact on the spot and derivatives markets, Bitcoin is currently trading at $63,000, marking a slump of 7% in the last 24 hours. So, considering all these events, such a flash crash may have had a broader impact than initially thought, and could indicate a potential ripple effect in the cryptocurrency market.

Price of Bitcoin in 24h candlesticks
Image: Tradingview

Edited by Stacy Elliott.

Stay on top of crypto news, get daily updates in your inbox.