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CZ Clarifies: Flash Crash in BTC/USD1 Trading Pair Caused by Low Liquidity, No Liquidation Occurred
Summary: In response to rumors, Solv Protocol's Business Development Manager Catherine stated that Binance launched a 20% fixed annual deposit promotion with USD1, leading to a surge in users exchanging USDT for USD1, causing a temporary 0.39% premium on USD1. Some funds were then borrowed through the Lista DAO lending market, using SolvBTC or SolvBTC-BTCB as ...
In response to rumors, Solv Protocol's Business Development Manager Catherine stated that Binance launched a 20% fixed annual deposit promotion with USD1, leading to a surge in users exchanging USDT for USD1, causing a temporary 0.39% premium on USD1. Some funds were then borrowed through the Lista DAO lending market, using SolvBTC or SolvBTC-BTCB as collateral to borrow USD1 and gradually selling on the spot market to meet demand. During this process, some traders directly sold BTC at market price through the BTC/USD1 trading pair. However, due to the pair's low liquidity, a large market order quickly depleted the buy orders, briefly lowering the BTC price, which was swiftly bought back by arbitrage bots to restore the price. CZ clarified that the exchange platform was not involved in these trades. Due to the low liquidity of the newly listed trading pair, a large market order could cause a momentary price spike, but arbitrageurs quickly corrected the price back to normal levels. Additionally, since this trading pair is not included in any index, no liquidation was triggered.
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Link: CZ Clarifies: Flash Crash in BTC/USD1 Trading Pair Caused by Low Liquidity, No Liquidation Occurred [Copy]
