Bitcoin Flash Crash on Binance: Holiday Liquidity Shock Sends BTC Briefly to $24,000

During the Christmas holidays, liquidity on cryptocurrency exchanges traditionally declines, and this year the market clearly demonstrated the risks associated with thin trading conditions. On Binance, the price of Bitcoin briefly collapsed by more than 70%, dropping to around $24,000.

The actual drawdown reached roughly 72% within just a few minutes, despite the fact that Bitcoin’s prevailing market price at the time was hovering near $87,700. The sharp price discrepancy was localized and affected only specific trading pairs.

The incident was driven by a liquidity shortage. Amid the holiday weekend, trading volumes on centralized exchanges fell sharply, allowing large sell orders to effectively drain the order book and trigger a sudden price collapse.

Analyst Joao Wedson commented on the situation on X, noting that low liquidity across several trading pairs on multiple platforms led to extreme volatility. According to him, this resulted in short-lived price distortions and arbitrage issues that lasted for several minutes.

At the same time, some market participants suspected market manipulation. According to one theory, a large short seller may have deliberately pushed the price lower by exploiting thin liquidity in order to capture arbitrage opportunities. This hypothesis is indirectly supported by the fact that shortly after the incident, Bitcoin’s price on Binance quickly rebounded above $87,000.

The episode once again highlighted the vulnerability of the crypto market during periods of low liquidity and served as a reminder of the heightened risks associated with trading during holiday periods.