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OKB flash crash wipes millions in minutes, here’s what happened

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The coin quickly recovered to $48 and has since been stable at those levels.
Posted: | Last updated: January 26th, 2024
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Posted: | Last updated: January 26th, 2024

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  • About $760 million of OKB’s market cap was wiped out during the precipitous fall.
  • The wild fluctuation happened due to liquidation cascades.

Cryptocurrency exchange OKX’s native token OKB flash crashed by more than 25% during the trading hours of 23rd January.

The cryptocurrency tumbled from $51.99 to $39 in a matter of 10 minutes, AMBCrypto noticed using CoinMarketCap data. About $760 million of OKB’s market cap was wiped out during the precipitous fall.

Source: CoinMarketCap

However, the coin quickly recovered to $48 and has since been stable at those levels.

OKB affected by liquidation cascades

The wild fluctuation happened due to liquidation cascades, according to OKX’s own admission. The official handle of OKX Chinese said on X,

“After the currency price hit 48.36 $USDT at 17:07:26 (HKT), it triggered the liquidation of multiple large leverage positions, coupled with the impact of market conditions, the currency price fell, which further triggered the liquidation of pledged loans, leverage transactions and cross-currency transactions.”

Note that liquidation cascades happen when a sudden bullish or bearish event leads to forced liquidation of positions. The cascading effect has the potential to plunge the entire market.

OKX announced full compensation for users who lost their funds due to the abrupt liquidation, including pledge lending/margin trading/cross-currency transactions.

Flash crashes happen when one or many holders of an asset suddenly decide to sell, causing the price of the asset to tank in minutes.

In the crypto market, this behavior is linked with whales – those who hold a large amount of cryptos at their disposal.

However, unlike regular crashed, the prices rebound to original levels just as quickly.

OKB starts trending on socials

The developments boosted OKB’s social value, AMBCrypto observed using Santiment’s data.

The number of mentions of the coin on crypto-linked social media channels jumped to their highest value since September 2023.However, with the slump, investors’ sentiment nosedived, falling way deep into the negative territory.

Source: Santiment

Realistic or not, here’s OKB’s market cap in BTC terms

OKX reserves stay intact

Notably, there were no major outflows from OKX, showing that perception about the exchange’s health has not shifted much.

 

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Aniket Verma works as a journalist at AMBCrypto. Contrary to most who are primarily interested in merely tracking price movements of cryptos, his focus is on examining the niche intersection between cryptocurrencies and traditional finance. A so-so Bitcoin maximalist, Aniket has a strong disdain for memecoins and the unfounded frenzy they seem to generate every market season. Coming from a strong engineering background, Aniket previously worked as a Content Manager for TV9 Network. Before his stint over there, he was an Associate Multimedia News Producer at Reuters.
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