At 3:30pm New York time yesterday, the price of bitcoin (BTC) began to quickly decline. On its most liquid USD trading pair, its price fell from $114,683 to $110,635 within seven minutes. It then settled in the $112,000s range for a couple hours.
Immediately, the sudden event went viral. One observer was absolutely convinced, “PEOPLE WILL GO TO JAIL FOR THIS!”
Plenty of influencers called the event a flash crash, with millions of investors wondering if the negative trend would continue. Fearmongers forecasted additional selling from the same set of wallets that had initiated the 3:30pm sale.
The more sensational, or false, the claim, the more attention it earned on social media.
One commentator told over 150,000 viewers that the price of BTC fell under $110,000 – even though it had not on Coinbase, Bitstamp, Kraken, or any major fiat trading pair.
The supposed BTC flash crash earned millions of combined impressions, even though the sell-off was relatively orderly and unremarkable.
Read more: Explained: How bitcoin market sell orders cause flash crashes
Indeed, the most remarkable part of yesterday’s trading action was its misinterpretation.
True BTC flash crashes have occurred in the past, with instantaneous losses followed by a nearly full recovery. Unlike a flash crash, however, yesterday’s BTC price did not fully recover from its sell-off nor even attempt a full recovery for many hours.
Moreover, unlike some emotional pleas on social media, no one will be going to jail for causing any flash crash yesterday. It is not illegal to sell a large quantity of a global commodity.