Bank Run

A bank run occurs when many customers withdraw their funds simultaneously due to fears that the institution (whether it’s a bank or a crypto exchange) is about to become insolvent. In crypto, this can happen when investors fear an exchange or platform might collapse, prompting mass withdrawals that further strain the institution's liquidity. For example, during market downturns, some exchanges experience liquidity crises as users rush to withdraw funds, creating a self-fulfilling crisis.