Why can a flash crash on an illiquid exchange trading pair lead to large temporary Bitcoin price swings?
Why is this the correct answer?
This is correct because markets with thin order books cannot absorb even modest buy or sell orders without moving price substantially. Beginners should know that low liquidity environments magnify the impact of each trade, causing exaggerated temporary price swings until deeper markets resume normal trading activity.
AI-Generated Content Disclaimer
Important Notice: This content has been generated with the assistance of artificial intelligence. While we strive for accuracy, there may be errors or inaccuracies in the information provided. Please exercise caution and verify any information before making decisions based on it. This information does not constitute investment advice, financial advice, trading advice, or any other sort of advice. You should not treat any of the content as such. CryptoMeteo does not recommend that any cryptocurrency should be bought, sold, or held by you. Always conduct your own due diligence and consult with a financial advisor before making any investment decisions.