- A vulnerability in Ledger’s code library triggered a price drop in Bitcoin, causing liquidations across crypto markets.
- The flaw prompted Ledger to release an update while Bitcoin tumbled to $41,500, wiping out $83 million in leveraged positions.
- The plunge led to mass liquidations of Bitcoin futures contracts as open interest plummeted, demonstrating the fragility of blockchain networks.
The Incident
A vulnerability in Ledger’s code library triggered a sudden drop in Bitcoin’s price, causing a cascade of liquidations across crypto derivatives markets.
The Fallout
The compromised code prompted Ledger to quickly release an update to patch the flaw. Meanwhile, the ripple effects sent Bitcoin tumbling to $41,500, its lowest point during the day.
According to Coinglass, the drama resulted in approximately $83 million worth of liquidated positions over 4 hours as highly leveraged trades were wiped out.
Open Interest Plummets
Bitcoin’s price had risen above $43,000 on Tuesday, partly thanks to the Fed signaling further pause on rate hikes. This drove a spike in open interest on CME Bitcoin futures.
However, Thursday’s sudden decline led to the liquidation of nearly 7,000 Bitcoin futures contracts as open interest plunged.
While brutal, liquidation cascades are a natural part of crypto markets. Leverage allows traders to maximize gains but also magnifies losses when volatility strikes. Events like the Ledger vulnerability demonstrate the fragility inherent to open, transparent blockchain networks.
