- 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.
$OKB, @okx ‘s exchange token, fell by 25% in the past 30 minutes, with no notable outflows from major asset reserves so far.https://t.co/PQ06Wsix82 pic.twitter.com/JsNnvuoDVA
— Ki Young Ju (@ki_young_ju) January 23, 2024