Question #603 ·
What impact did the Paradex exchange glitch that momentarily valued Bitcoin at zero have on market volatility?
- It permanently reduced Bitcoin supply by burning tokens.
- It improved network security by patching wallet vulnerabilities.
- It triggered abrupt automated liquidations boosting Bitcoin volatility. Right answer
Why is this the correct answer?
This is correct because when the Paradex glitch momentarily priced Bitcoin at zero, many automated trading systems and margin positions were liquidated. These forced liquidations accelerated sell orders, causing rapid price swings. Beginners need to understand that exchange malfunctions can trigger algorithmic trades and cascade into wider market volatility, illustrating how technical issues can amplify market stress beyond fundamental factors.