A liquidity crisis occurs when there is a sudden and significant increase in trading volumes, leading to a shortage of buyers or sellers, and making it difficult to execute trades at prevailing market prices. This can happen during a flash crash, resulting in:

1. Market participants struggling to buy or sell assets

2. Wide bid-ask spreads

3. Order book fragmentation

4. Increased volatility

5. Price distortions

6. Trading halts or suspensions

7. Systemic risk and market instability

Liquidity crises can be caused by:

1. High-frequency trading and algorithmic trading

2. Market sentiment shifts and investor panic

3. News events and geopolitical shocks

4. Regulatory changes and market structure issues

5. Technological failures and infrastructure overload

To mitigate liquidity crises, market participants and regulators can:

1. Implement liquidity provision programs

2. Enhance market infrastructure and technology

3. Promote market transparency and disclosure

4. Encourage diverse and robust market participation

5. Develop effective risk management strategies

6. Conduct regular stress tests and scenario planning

7. Foster international cooperation and coordination.