A brief flash crash was experienced in the BTC/USD1 trading pair on Binance. The price of Bitcoin dropped to $24,000 before quickly recovering.
The event did not affect Bitcoin prices in major pairs like BTC/USDT. However, it highlighted liquidity risks in new trading pairs.
The BTC/USD1 plunge to $24,000 reveals the risks of low liquidity.
According to Binance market data, the incident lasted only a few seconds. The BTC/USD1 price later stabilized above $87,000.
USD1 is a new stablecoin issued by World Liberty Financial. The project receives support from the family of U.S. President Donald Trump.
Binance's charts showed a sharp market spike. The incident did not cause liquidation losses.
The incident occurred during the Christmas holidays. Trading volumes collapsed rapidly at that time. Some observers speculated that it was a liquidity test in the BTC/USD1 pair.
Joao Wedson, the founder of Alphractal, explained that this phenomenon is common, especially in a bear market. Capital investments often weaken during such phases.
“Low liquidity in some trading pairs across different exchanges has caused severe price fluctuations. This leads to temporary price distortions and arbitrage opportunities for a few minutes. Such phenomena are more common than often thought when the market is in a downward phase,” Joao Wedson explained.
A more detailed explanation from the investor community linked the case to Binance's USD1 campaign. Binance recently launched a 20% APY offer, up to $50,000 in USD1 per user.
WuBlockchain, a well-known market tracking account, reported a sharp increase in the supply of USD1 after its launch. The supply increased by over 45.6 million tokens within a few hours. The total market cap rose to over $2.79 billion.
The sudden capital inflow to the USD1 stablecoin raised its price by 0.2%.
X-tili Punk explained that many investors were seeking arbitrage opportunities. They borrowed USD1 and gradually sold it to users participating in the spot market.
At the same time, some traders decided to sell through the BTC/USD1 pair. They were caught off guard by thin liquidity. Prices collapsed sharply, causing the situation described above.
“This is just a minor fluctuation in a bear market. There is no reason for concern. Similar swings will continue to be seen,” investor Punk noted.
Could a similar situation occur with the BTC/USDT pair?
Now attention is turning to a broader question. Could a similar case happen with the BTC/USDT pair? That pair is the most liquid in the market. A sudden drop would cause massive liquidation losses.
Analyst Maartunn referred to Kaikon data. He pointed out that Bitcoin's 1% market depth has significantly increased over the years.
“The depth not only recovered — it expanded. By October 2025, Binance's 1% depth exceeded $600 million. This level is higher than before the crash in 2022,” Maartunn said.
Maartunn also emphasized that the price drop of the BTC/USDT pair did not weaken liquidity. Over 100 days, the BTC/USDT pair dropped by 21.77% (from $110,291 to $86,089). During this time, the daily average spot volume was $19.8 billion, totaling $613.5 billion.
Due to deeper market depth and abundant volume, a similar event with the BTC/USDT pair is unlikely.
However, there is an important lesson from the case for traders. Careful selection of trading pairs is essential. Low liquidity pairs can lead to significant slippage and unexpected losses.
