Market circuit breakers will temporarily stop trading in a financial market or a single stock. The goal is to stop the panic selling. This temporary stop lets the market participants “catch their breath”. But it may not keep the market from decreasing after trading starts again.
How Circuit Breakers Work
There are three levels of market circuit breakers.
- A Level 1 market circuit breaker occurs when the trading price gets to 7% below its previous close.
- A Level 2 market circuit breaker occurs when the trading price gets to 13% below its previous close.
- A Level 2 market circuit breaker occurs when the trading price gets to 20% below its previous close.
If a Level 1 or Level 2 market circuit breaker is touched, the trading is stops temporarily for a minimum of 15 minutes. If a Level 3 is touched, trading is stopped for the trading day.
At 12:00 A.M GMT today, the price for Bitcoin was $7935.07. The low price for Bitcoin today (so far) as $5,678.14. This was almost a 28.5% decrease! Note: these prices are from CoinDesk’s Bitcoin Price Index.
If Bitcoin trading was a regulated market, the large price decrease today could have been controlled.
