Understanding the Flash Crash: The Story Behind Chain.com’s XCN Token Turmoil

What Happened to XCN?

On an otherwise uneventful Tuesday, the world of crypto experienced a rollercoaster ride when Chain.com’s XCN tokens suddenly plummeted by over 90%. Picture this: it’s 1:00 pm SGT (5:00 am UTC), the sun is shining, and then, bam! Market chaos ensues!

Technical Glitches and Market Makers

The chaos began due to a combination of a market maker’s action and an API glitch. As bids got stuck thanks to a sudden technical hiccup, the stage was set for a free fall.

• Tokens experienced a whopping 90% decrease.
• Liquidity took a nosedive and margin calls added fuel to the fire.

A Rapid Recovery

However, by around 3:00 pm SGT (7:00 am UTC), the panic started to fade. Chain.com’s developers, in a heroic effort reminiscent of a high-stakes movie plot, collaborated with exchanges to clarify that a breach or exploit was not the cause of the market mayhem. This reassured traders and investors, leading to a quick rebound in prices.

The Role of Margin Calls

Deepak.eth, the CEO of Crypto.com, identified that a massive margin call played a pivotal role in the crash. To put it simply, the situation spiraled when 500 million XCN (approximately $42.24 million) was liquidated at lightning speed.

“There seems to have been a large margin call on #XCN markets. We are working with exchanges and our market makers to identify the issues.” — Deepak.eth

Price Isn’t Always Right

It’s important to note that a token’s value can drastically differ from supply and demand principles. A single big trade or even a sequence of sizeable orders can take prices for a wild ride, particularly in low liquidity situations.

Case in Point: Cope’s Coin Conundrum

Take the example of the Cope project, which saw a staggering 77% drop after developers announced a need to part ways with some of their tokens to keep things afloat. Just ten percent of the outstanding COPE tokens hitting the market was enough to spark the chaos!

Closing Thoughts

The incident with XCN isn’t just a tale of prices dropping and recovering; it’s a striking reminder of the delicate nature of the crypto market. Who knew one moment could lead to such panic and then such swift recovery? It’s as unpredictable as someone trying to diagnose their pet’s illness on the internet!