What is the purpose of a circuit breaker in the cryptocurrency market?

1 answers

• Dec 28, 2021 · 3 years ago
  In the cryptocurrency market, a circuit breaker is a regulatory mechanism that temporarily halts trading activities when there is excessive price volatility. Its purpose is to prevent market crashes and protect investors from sudden and drastic losses. When triggered, the circuit breaker suspends trading for a specific period, allowing the market to stabilize and preventing further price fluctuations. This helps restore confidence in the market and prevents panic selling or buying. Circuit breakers are an important tool in market regulation, as they provide a pause for participants to assess the situation and make informed decisions. However, it's worth noting that circuit breakers have their limitations and may not always be effective in preventing market crashes. They should be used in conjunction with other regulatory measures to ensure market stability and investor protection.
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