Binance’s BTC/USD1 trading pair experienced a brief flash crash. Bitcoin plummeted to $24,000, but quickly recovered.
This incident did not affect the Bitcoin price of major pairs such as BTC/USDT. However, the liquidity risks of newly launched trading pairs were highlighted.
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BTC/USD1 plummets to $24,000, risk of decline in liquidity becomes apparent
According to Binance market data, the incident lasted only a few seconds. BTC/USD1 price has since stabilized above $87,000.
USD1 is a new stablecoin issued by World Liberty Financial. The project has received support from the family of US President Donald Trump.
Binance’s chart showed a sharp wick. This move caused no liquidation damage.
The incident occurred during the Christmas holiday period. At that time, trading volumes declined sharply. Some observers speculated that this move was a test of the liquidity of the BTC/USD1 pair.
Joanne Wesson, founder of AlphaRactal, explained that this phenomenon appears more often in bear markets. In such situations, capital inflows tend to weaken.
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“Decreased liquidity in some trading pairs across multiple exchanges is causing sharp volatility. This results in temporary price fluctuations of several minutes and arbitrage issues, which is more common during market bear phases,” Joanne Wesson explained.
In another more detailed explanation from the investor community, the incident was tied to Binance’s USD 1 promotional campaign. Binance recently launched a 20% APY promotion of up to $50,000 at $1 USD per user.
WuBlockchain, a reputable market monitoring account, reported that the supply of USD 1 surged after the launch. The supply increased by over 45.6 million tokens within hours. The total market capitalization exceeded $2.79 billion.
The sudden capital inflow to USD 1 caused the stablecoin price to rise by 0.2%.
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Punk from X Account explained that many investors tried arbitrage. They borrowed $1 and gradually sold it on the spot market to participants in the promotion.
Meanwhile, some traders chose to sell the BTC/USD1 pair. They were caught off guard by the lack of liquidity. Prices fell sharply, causing the results described above.
Investor Pank said: “This is just a small bear market swing. Don’t worry. We’ll see similar swings many times in the future.”
Could a similar situation happen to BTC/USDT?
Now, broader questions are gaining traction. Could a similar event occur with the BTC/USDT pair? This pair holds the highest liquidity on the market. If there were a sudden drop, there would be huge liquidation losses.
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Analyst Martun cited data from silkworms. He pointed out that Bitcoin’s 1% market depth has increased significantly in recent years.
“Depth has not just recovered, it has expanded. By the October 2025 high, Binance’s 1% depth exceeded $600 million. That level exceeds its pre-crash level in 2022,” Martun said.
He also emphasized that the drop in BTC/USDT price will not hurt liquidity. Over 100 days, the BTC/USDT pair has fallen 21.77% (from $110,291 to $86,089). Average daily spot trading volume reached $19.8 billion during this period, for a total of $613.5 billion.
A similar event remains unlikely for BTC/USDT due to the deep market depth and abundance of trading volume.
However, the incident holds a lesson for traders. It is essential to choose your trading pairs carefully. Illiquid pairs can cause severe slippage and unexpected losses.
