Essentially what happened is that Bitcoin Exchange Bitfinex allows you to trade with leverage. There were approximately $28M USD worth of leveraged orders and they were margin called as the price fell. This created a feedback loop that resulted in the flash crash.
If not, why do people offer leveraged trading? Just for the interest? A fee?
Bitfenix doesn't provide the leverage, they use other trades to provide it.
Those traders get hourly interest for participating.
If you have a balance and you don't want to use it, loaning it out can make some money you wouldn't otherwise get.
It is similar to loans but on a shorter window.
Here's a screenshot of what you are looking for: https://i.imgur.com/SvSFYMK.png
edit1: I also added that graph to the post.
But that drop doesn't happen at the same time as the big drop on Bitfinex, as far as I can see. I assume all times are UTC, unless otherwise stated.
The drop in total sum of USD swaps fell from 2014-08-14T07:30 to 2014-08-14T08:30, but the drop on Bitfinex happened around 2014-08-14T10:00
Especially since bfxdata is a third party site.
All that aside, Good article, interesting read.