Bitcoin flash crashed late on Wednesday, losing over $200 of its value in a matter of minutes, and here's why

The digital coin No.1 lost over $200 of its value and touched $6,100 in a matter of minutes before a strong recovery above $6,500 handle. The theory goes that the sharp sell-off was triggered by massive short-covering, but what caused the panic?

A sudden sell-off was preceded by the news that hackers attacked Japanese cryptocurrency exchange Zaif and stole about  $60 million in digital assets, including Bitcoins, Bitcoin Cash and MonaCoin.

The company noticed suspicious activity on its accounts on September 14 and suspended asset deposit and withdrawal services until the circumstances are clarified. The investigation revealed the unauthorized access to Zaif's hot wallets, which resulted in cryptocurrency loss worth of 6.7 billion yen, or $60 million. It was confirmed that 6,000 BTC were lost, while the amounts of other coins stolen by the hackers remain unknown. For the purpose of further in-depth investigation of the case, the company filed the incident as a criminal case with local authority.

The cryptocurrency community was infuriated by the fact that it took five days to notice the breach.

"It took them four days to notice the hack. The fact that they do not know the missing amount of #BCH and #MONA is another sign of their complete operational incompetence. Is Mark Karpeles running this place?" Software engineer and cryptocurrency consultant at LBRY  Kay Kurokawa wrote in his Twitter account.

Later it has become known that the exchange reached an agreement with FISCO, a Japanese investment firm, that will provide about $44M to cover losses.

This incident is the second massive cryptocurrency heist in Japan after Coincheck's case, where hackers stole $520 million worth of the NEM tokens.

Currently, BTC/USD is changing hands at $6,400, gaining 0.87% on a daily basis and mostly unchanged since the beginning of Thursday.

BTC/USD, 1-hour chart