Bitcoin Under Pressure

A ‘fat finger’ error causes Bitcoin price to plunge to $5,402 on Pyth Network

Users of Pyth Network, an oracle platform that provides verifiable market data to sophisticated DeFi applications, were rattled after an unknown error caused more than 90% plunge in Bitcoin price.

The possible “fat finger” mistake shows the Pyth briefly reported Bitcoin’s price as $5,402 at a time when the primary cryptocurrency was trading at around $42,000 per unit.

Pyth Network tweeted about the incident saying that between 12:21 and 12:23 UTC the BTCUSD aggregate price was below $40,000. The lowest price reported on the platform was $5,402 with “a confidence interval of $21,623 (4x the asset reported price) for a single slot” which was off-market relative to the BTC price available on other markets.

“Engineers are continuing to investigate the cause and a full report is in the works,” the company said.

It’s unclear if the error has resulted in severe consequences for Pyth’s users. However, blockchain firm Bonfida claims that the flash crash on Pyth Network caused a series of liquidation events on “the Audaces protocol BTC-PERP market (unfortunately working as intended).”

While split-second crashes may be started by humans, cryptocurrency market structure means mistakes are more likely to snowball rapidly. Concerns that crypto exchanges have become more susceptible to flash crashes, a term applied when an asset price briefly surges or plunges for no obvious reason, have grown due to the rise in trading computerization.

Pyth is currently focused on institutional-grade data provision and already receives data from several industry heavyweights. Incubated by Jump Trading earlier this year, a growing list of institutions have joined its network recently including Jane Street, GTS, LMAX, Virtu Financial, Genesis Global Trading,  CMS, CoinShares, XR Trading and Hudson River Trading.

Launched in April 2021, the Pyth Network connects market data it obtains from these high-profile trading firms and exchanges, which then can be integrated into DeFi applications through the Solana blockchain.

The platform, which reportedly handles 50,000 transactions per second, offers real-time crypto market data with plans to later expand into equities and other asset classes.