A flash crash is a sudden and sharp drop in the price of an asset, followed by a quick recovery. In crypto markets, which are less liquid and more volatile than traditional markets, flash crashes can be especially dramatic and unpredictable.
These events are often triggered by large sell orders, leverage liquidations, or technical failures like faulty trading bots or glitches on exchanges. The domino effect of panic selling and stop-loss triggers can deepen the crash in seconds.
Flash crashes highlight the importance of proper risk management and the use of limit orders over market orders. While some savvy traders profit by “buying the dip,” others suffer heavy losses from slippage or forced liquidations.
