Network congestion happens when transaction demand exceeds the network’s processing capacity, leading to delays and higher costs. This issue is common during high-demand events like token launches or market rallies. For example, when Bitcoin sees a surge in transactions, its limited block size causes delays, and many transactions are left waiting for confirmation.

To avoid being left behind, users may raise transaction fees in a bidding war to prioritize their transactions, which adds to the chaos. This can be a major frustration for traders who need fast execution to seize market opportunities.

On trading platforms, congestion can also occur when too many buy or sell orders flood the system, causing delays and increased slippage. This leads to market volatility, making it harder to execute trades at the intended price.