In normal market conditions, a bid/buy wall is an indicator of demand for a market. It occurs when a large bid enters the market, greater than existing bids near the top of the orderbook. Sell walls are the opposite, i.e. an indicator of desire to sell a market.
In unregulated Digital Asset markets, ‘spoofs’ can occur which is an attempt by a rogue trader to artificially create a bid wall to drive up the price of the market in the short term. Rogue traders can also manipulate markets by placing large sell orders in an attempt to drive down the price.
Largest Bid Walls Across Crypto Markets
Large Buy walls typically occur around significant support levels. If a market appears in the top 10 buy walls and has over $1 million in daily trading volume and has been in a downtrend, it can mean it is close to bottoming out. With this you can place a bid in anticipation of getting filled and sell for 2–3% ROI in the short term. Once an opportunity has been highlighted through our analytic, you can search the relevant exchange for the market and trade accordingly.
Top 10 bid walls including DCR USDT
In this example the DCR-USDT market has a 10X bid wall on HUOBIPRO. The graph shows that the market has been in a downtrend and is getting support at this current level indicating there may be a short time price uptick.
Largest Sell Wall
Large Sell walls typically occur around significant resistance levels. If a market appears in the top 10 sell walls and has over $1 million in daily trading volume and has been in a uptrend, it can mean it is close to topping out. With this you can place bids much further down the stack in anticipation of getting filled and sell for 2–3% ROI in the short term.
With a sell wall, for the MKR-USDT market, you could submit a bid limit order further down the stack e.g. 3% below the current price.
This chart shows MKR is still downtrending, expecting it to drop even more from the level it currently is. Buying below the current order and selling 1% above may prove a profitable trading strategy.
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Credit: George Lewin-Smith