Binance.US Triggers Flash Pump, Sending Bitcoin Skyrocketing To $138K

Key Points:

• Binance.US displayed bitcoin at $138K, almost 400% higher than spot prices, due to poor liquidity.
• Someone market bought 62.22 BTC in USDT, causing the price to shoot to all-time highs.
• In Oct. 2021, Binance.US experienced a similar event when BTC collapsed 87%, blamed on a buggy algorithm.

Binance.US has recently been receiving criticism from regulatory agencies, such as the SEC and CFTC.

Additionally, it appears that the exchange is struggling to maintain some of its largest Bitcoin (BTC) order books.

On Tuesday evening, Binance.US displayed the price of Bitcoin at over $138,000 for its Tether (USDT) market, which was almost 400% higher than the spot prices shown on other platforms. This sudden surge only lasted for a few seconds, according to TradingView data reviewed by Blockworks. During this time, 62.22 BTC was exchanged, which is equivalent to around $1.8 million at current prices. The sudden upwards spike suggests that someone purchased Bitcoin using USDT, and poor liquidity meant that all available sale orders were immediately filled at realistic prices. As a result, the price of Bitcoin soared to fresh all-time highs, with only sky-high ‘joke bids’ waiting.

Typically, such situations are reflected in the opposite direction, with “flash crashes.” Binance.US experienced such an event in October 2021, when the price of Bitcoin collapsed 87%, from $65,000 to $8,200, before quickly rebounding. Binance.US blamed this situation on a buggy trading algorithm. Similarly, in December 2018, the price of Ether (ETH) dropped from $100 to $13 on Coinbase Pro, only to return within minutes.

Binance.US has been grappling with poor liquidity for quite some time, as it has had struggles with its banking partners in light of its regulatory rumbles. Moreover, last month, traders were paying premiums of more than 3% on Bitcoin and similar amounts for Ether compared to rival platforms. Analysts have also suggested that liquidity problems were to blame for the price discrepancies. However, these premiums have since closed.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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