It's caused by the digitizer either going bad or the gold contacts on the bottom of the digitizer and home flex cables grounding out on the aluminum of the iPad when closed. I always buy OEM quality digitizers that have these areas pre taped. Also, there is a row of gold contacts on the connector that connects to the motherboard. Make sure those aren't exposed either, because those will ground out on the aluminum back when it's closed as well.
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From your video the touch issue starts happening when you click the home button or near it. That's the area that needs to be taped off. If there is any gold exposed tape it off with Kapton tape.
It's caused by the digitizer either going bad or the gold contacts on the bottom of the digitizer and home flex cables grounding out on the aluminum of the iPad when closed. I always buy OEM quality digitizers that have these areas pre taped. Also, there is a row of gold contacts on the connector that connects to the motherboard. Make sure those aren't exposed either, because those will ground out on the aluminum back when it's closed as well.