Bitcoin Price Crashes to Zero on Paradex Exchange as Glitch Fuels Mass Liquidations

The crypto derivatives market experienced severe disruption following a major technical malfunction on the Paradex exchange, where the price feed for Bitcoin (BTC) futures momentarily plummeted to $0.00. The erroneous data, which appeared during high-volume trading, was not the result of genuine market activity but rather a critical error within the exchange’s internal pricing oracle.

This unprecedented price deviation triggered immediate and devastating consequences. The exchange’s automated risk management systems, programmed to enforce margin requirements, instantly liquidated numerous leveraged positions. Hundreds of traders who held long BTC contracts reported catastrophic losses as their holdings were automatically closed out based on the erroneous zero price, despite the real-time global spot price remaining significantly higher.

Paradex quickly acknowledged the ‘abnormal trading activity’ and temporarily halted trading to investigate the source of the glitch. Initial findings confirmed that the crash was isolated to the internal data feed and did not reflect a successful external attack or market collapse. The incident immediately raised serious concerns regarding the reliability of centralized exchange infrastructure, especially in the sensitive area of derivatives trading.

In response to the outcry, Paradex officials issued a public apology and committed to making users whole. They announced a comprehensive audit of all forced liquidations that occurred during the affected window, promising to revert trades and restore funds for users who suffered losses directly attributable to the technical failure. The event underscores the critical operational risks associated with centralized leverage platforms and the necessity of robust fail-safes for pricing mechanisms.

Source: Bitcoin Price Crashes to Zero on Paradex Exchange as Glitch Fuels Mass Liquidations