Bitcoin (BTC) experienced a flash crash yesterday in which the price plummeted from $29,800 to as low as $27,243 in just 60 minutes. The reasons for this violent price movement, which has not been seen on the Bitcoin chart for a long time, has caused speculations about what caused the crash.

The popular Twitter account db (@tier10k) and crypto market intelligence firm Arkham Intelligence are in the crosshairs of the speculation. But what happened?

Bad Data Responsible For Bitcoin Flash Crash?

The crash was allegedly due to a wallet move by the US government and the sell-off of Mt. Gox Bitcoins. The Twitter account db sent out an automated tweet at 4:08 pm EST (8:08 pm UTC) that stated, “[DB] Mt Gox and US Govt Wallets Making Transactions,” which proved to be false. See more

[DB] Mt Gox and US Govt Wallets Making Transactions: Arkham Alert — db (@tier10k)

Arkham Intelligence denies sending out erroneous messagesto certain users. But @tier10k also denied making a mistake: “[DB] Arkham: A Bug Fix Deployed Today Caused Alerts to Be Sent Erroneously to Small Subset of Users,” the account wrote as justification, explaining in a follow-up tweet:

Had to wait to get clarification from Arkham, did not want to point the finger incorrectly. Believe they will make a statement soon. Will use multiple on-chain providers going forward.

For its part, Arkham an investigation DB Alert situation and determined that Arkham alerts “were sent correctly in this case.” The platform claims that DB set two alerts for all Bitcoin transactions worth more than $10,000 and named those alerts “Mt Gox” and “US Gov.” Thus, Arkham’s account of events suggests that DB inferred the transactions of specific Bitcoin addresses from the designations he himself assigned. “When we fixed a bug causing us to not send alerts on configs like this, he then correctly received many alerts based on his parameters. No one received inaccurate alerts, they simply began receiving the alerts they had previously set,” Arkham states. Remarkably, Arkham also clarifies that db’s tweets did not trigger Bitcoin’s flash crash. According to Arkham’s research, the crash began before db’s tweet, “as the drop occurred between 19:17 and 20:01 UTC (15:17 and 16:01 EST), and the alerts and tweet were sent afterwards at 20:07 UTC and 20:08 UTC (16:08 UTC) respectively.”

Cascade Of Liquidations

The bottom line is that the Bitcoin price plummeted by more than 8%, but as the data shows, this happened already prior to db’s tweet. In the process, over $1 billion in open interest (leverage) was wiped out. According to Coinglass , a total of $80.3 million in longs and $73.4 million in shorts were liquidated in BTC yesterday. As analyst @52skew further notes, selling volume on the largest exchanges was huge. Binance saw selling volume of 19,400 BTC, Coinbase of 5,000 BTC, Bitstamp of 1,400 BTC and OKX of 6,400 BTC. He the chart below to explain what happened.

At press time, the Bitcoin price has already recovered from the sharp drop. BTC already erased most of the losses and was trading at $29,189.