A bitcoin worth 11 million won trading at just 1,000 won? The crisis behind Korbit
A Bitcoin was traded at 1,000 won at the Korea cryptocurrency exchange Korbit. The Bitcoin, which was traded at 11 million won, similar to the price on the global market, fell sharply to 1,000 won as mass selloff occurred at 12:30 p.m. Feb. 10. Korbit said the mass selloff was a normal transaction. Flash crash: Was the plunge a result of an order mistake? In the financial market, “flash crash” occurs when a product, for no apparent reason, is traded for an abnormally low price that veers off from its initial market value. The term surfaced in 2010, when, the Dow Jones Industrial Average in the United States abruptly plummeted 9 percent over just 15 minutes during afternoon trading on May 6. A 9-percent is a significantly sharp drop for the Dow, an index that includes the stocks of major U.S. companies. The cause behind the drop turned out to be a mistake by an investment bank employee who mistakenly typed in billion on an order instead of million, a mass selloff fueled by automated trading. There have been several similar cases in the traditional financial market. Here in Korea, the stock market was once in turmoil on an order mistake made by an employee at Hanmaek Securities. At the time, some commentators speculated that it was an attack from North Korea. The case caused a 46.2 billion won loss that resulted in the brokerage firm going bankrupt in 2015. The so-called “fat finger,” which refers to order mistakes from brokerage firm employees, is uncommon. Some blockchain industry experts say the Korbit situation on Feb. 10 could have also been the result of an order mistake similar to those in traditional financial market. An API analysis found a massive selloff of 500BTC There was a technical analysis on the Korbit crisis. In a Feb. 11 post, a cryptocurrency blogger analyzed the situation with information provided by Korbit that included the transactions and calling price. The blogger said there was a sharp increase in the selloff at 12:30 p.m., with data many of the transactions made between 12:30 p.m. and 12:50 p.m. Much of the activity occurred in the first 10 minutes. For an hour and 30 minutes, until the value of the bitcoin returned to the level of the global market price, the total amount of bitcoin that were on sale was estimated at 504.69. The actual purchases that were made were 73.078. There were roughly 100 bitcoin that sold below 100,000 won. If a person purchases a bitcoin for 10,000 won instead of 1,000 won, they would have still made a profit that’s 1,100 times the current market value of 11 million won. On the same note, those that sold their bitcoin have suffered that much in losses. Whoever caused the selloff, analysts believe it was accidental Notwithstanding who caused the crisis, the dominant theory in the industry is that the selloff was a mistake. Korbit emphasized that the transaction itself was normal. “It’s not the exchange’s own system error,” said a Korbit official. “It’s something that naturally occurred in the market.” “Something that happens in the traditional financial market has happened in bitcoin,” said an industrial official, noting that such errors for massive selloff can occur as a result of trading programs or bots. But the official added that it’s hard to simply brush off the happening as a mistake. Some in the crypto community have suggested that it could be a transaction resulting from a previous order that an investor had set up earlier, that matched the purchase order. As of noon on Feb. 11, the bitcoin was again trading at 11 million won. Although it’s lower than 11.3 million won traded on Upbit or Bithumb, its’ price is now within the normal range.