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  1. Home
  2. /Glossary
  3. /Flash Crash
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Flash Crash

A sudden, severe price drop that happens within minutes or even seconds, often caused by cascading liquidations or a large sell order on thin order books.

Definition

A sudden, severe price drop that happens within minutes or even seconds, often caused by cascading liquidations or a large sell order on thin order books. Crypto sees these more often than traditional markets due to 24/7 trading and high leverage. Prices usually recover partially, but leveraged traders get wiped out.

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Related Terms

Liquidation

When a borrower's collateral is forcibly sold because their position became too risky.

Volatility

How much an asset's price fluctuates over time.

Order Book

A list of all buy and sell orders for an asset, organized by price.

Accumulation Phase

A period when smart money quietly buys up an asset before a major price move.

Annualized Return

The average yearly return on an investment, calculated to account for compounding.

Arbitrage

Profiting from price differences of the same asset across different markets.

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