Crypto exchange Bitget promised Monday to remunerate holders of its Ethereum-based BGB token, shortly after the cryptocurrency lost more than half its value in a sudden "flash crash."
The token plunged roughly 52% to $0.54 from $1.14 at around 10:30pm ET on Sunday before recovering most of its value within an hour, according to CoinGecko data.
Bitget attributed the flash crash to “unexpected volatility” in the crypto market in a Twitter (aka X) post on Monday. In the post, the company said it will issue a repayment plan to BGB holders in 24 hours, completing the compensation process in 72 hours.
$BGB experienced unexpected volatility today due to market conditions, but the price has quickly stabilized.#Bitget will fully compensate for any asset losses, and will provide a compensation plan within 24 hours, completing the compensation process within 72 hours. Bitget… pic.twitter.com/KJD2MLO9J6
— Bitget (@bitgetglobal) October 7, 2024
“Bitget will fully compensate for any asset losses,” Bitget said in the post. “We will continue to optimize margin position levels, risk management measures, and liquidation mechanisms to ensure a safer and more stable trading environment for you.”
Bitget Research Chief Analyst Ryan Lee said on Monday that BGB's sudden price drop is nothing for retail investors to fear in a statement shared with Decrypt.
“Occasional price dips are expected in any asset, and today’s drop could be attributed to overall market sluggishness, partly influenced by the holidays and golden week in Asia, which often affects market activity,” Lee said. "Despite this brief downturn, BGB has quickly stabilized, proving its resilience.”
BGB is trading at $1.08 as of publication time, CoinGecko data shows.
The token's sudden and steep price drop—and its equally quick recovery—is a classic example of a flash crash. A flash crash can happen when a host of token holders suddenly decide to sell a given asset at the same time, making the price fall dramatically in a short time period. After that initial crash, the price of the asset recovers rapidly.
Several flash crashes have happened in the highly volatile cryptocurrency market this year.
OKX's token fell more than 50% in less than five minutes in January. Meanwhile, Bitcoin's price plummeted roughly 80% to less than $9,000 on crypto exchange Bitmex in March, prompting an investigation into the matter.
Edited by Andrew Hayward
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