A flash crash is a sudden and sharp drop within the value of an asset, adopted by a fast restoration. In crypto markets, that are much less liquid and extra risky than conventional markets, flash crashes might be particularly dramatic and unpredictable.
These occasions are sometimes triggered by massive promote orders, leverage liquidations, or technical failures like defective buying and selling bots or glitches on exchanges. The domino impact of panic promoting and stop-loss triggers can deepen the crash in seconds.
Flash crashes spotlight the significance of correct danger administration and the usage of restrict orders over market orders. Whereas some savvy merchants revenue by “shopping for the dip,” others endure heavy losses from slippage or compelled liquidations.