iPhone X LCD leak, no point of impact, no coverage

I have had my brand new iPhone X for 6 weeks, in a case and put on a glass screen protector.

However, yesterday the screen started to glitch and I could feel it overheating near the camera. It was still functioning, but every time I went to open the camera it caused my phone to restart. After an hour or so the entire screen turned black and the screen would appear green when I tried to restart it.

There is not one single dent, scratch, or even crack on the screen, except there was what appeared to be a small black blob on the upper right hand corner. I immediately took it to the Apple store thinking it was a defect or internal malfunction, but upon further inspection the associate told me there was a hairline crack on the LCD which caused the screen to internally bleed and that this is not covered under their limited warranty. I was told, since it was a complex situation they would have to send it in for further analysis and the process would take anywhere between 3-5 days, but I would have to pay for the cost of the phone (anywhere between $250-$500).

Is this crazy? A single hairline fracture on my LCD caused the blob to bleed, but would not be covered under warranty? There is literally no point of impact or external damage in any way, not even a scratch! They said it could have been due to pressure or something that impacted the screen in some way, but are their screens not equipped to handle being inside a purse or even in a back pocket?

Should I take it to another retailer for a second opinion? I don't know what my other options are since this was give to me as a Christmas gift and I would not be able to afford the repair otherwise.