By CCN.com: On May 17, within minutes, the bitcoin price plummeted from around $7,800 to $6,400 in a flash crash, recording an unexpected 18 percent drop.

The sudden decline in the bitcoin price led the valuation of the crypto market to plunge from $257 billion to $225 billion, by more than $32 billion in less than 24 hours.

What triggered the sudden bitcoin price drop?

According to researchers and investors including Su Zhu, the CEO at Three Arrows Capital, and Eric Conner, a product developer at Gnosis, the bitcoin price plummeted as soon as a several thousand bitcoin sell order was placed on Bitstamp.

Zhu said:

BitMEX wicked down to $6,400. 2,000 BTC+ sell wall on Bitstamp absorbed. Looks like a marked price exploits by placing a large sell-on stamp (1 of 2 oracles for mark on BitMEX) to trigger liquidations on BitMEX. You would’ve been fine on lvg long on Bitfinex which didn’t go below $7,000.

Speaking to CCN.com in an exclusive interview, Zhu explained that investors may have taken advantage of the Bitstamp API, which then led contracts on BitMEX to become liquidated as the bitcoin price plunged.

“Bitstamp API issues I heard. Some bug where people getting filled on prices above their buys. This is used on leveraged products as mark price, hence triggering liquidations on BitMEX,” Zhu told CCN.com.

Conner suggested that the sell order on Bitstamp that led to BitMEX liquidations may have been larger than 2,000, likely around 5,000 BTC, worth more than $35 million.

“For reference someone put a 5,000 BTC sell on Bitstamp, which BitMEX uses for 50% of its feed and it appears to have tripped some algorithms which made a cascade on BitMEX,” Conner said.

Following the 18 percent drop in the bitcoin price, traders have become more cautious about the short-term trend of the market.

One trader said that he expected the market to absorb sell orders considering the positive sentiment around the crypto market in recent weeks. But, the market did not show a large buyback the trader anticipated.

“Hate to be that guy, but I’m not seeing the buy-back I was really hoping to see on BTC just yet. Objectively, this looks like a bear flag, and if I was looking for a long entry, I’d want to wait until we test $200 billion,” the trader said.

Will market recover?

Zhu noted that given the recent price action of bitcoin and other crypto-assets is a result of a market structure related move, he expects the market to recover relatively quickly in the near-term.

“This is a purely market structure related move, I expect it to be bought up extremely quickly,” he said.

Josh Rager, a cryptocurrency trader, also emphasized that the gap between the CME bitcoin futures market closing and the surge in the price of bitcoin last week has been filled, indicating a positive trend for the market.

$BTC – CME Futures Gap officially filled Looks like that was the dip to buy This is very bullish pic.twitter.com/hYCRMKUj2i — Josh Rager 📈 (@Josh_Rager) May 17, 2019

It remains unclear whether the absorption of a multi-million dollar sell order on May 17 would act as a roadblock in the short to medium term trend of the crypto market.

In recent weeks, the real 10 volume of bitcoin, which estimates the legitimate daily spot volume of the dominant cryptocurrency, hovered at around $1.9 billion, up more than six-fold since March.

If the volume of the market sustains, there exists a strong possibility that the market stabilizes subsequent to the sell-off, as Zhu suggested.

In the long-term, the prospect of the crypto market still remains positive. At Consensus, TD Ameritrade executive vice president Steven Quirk said that more than 6,000 clients of the institution traded something in the crypto market.

Click here for a real-time bitcoin price chart.