A buy wall is a phenomenon that can have a significant impact on the price of a crypto asset, so it’s crucial for investors and traders to understand what it means and how it works.
What Is A Buy Wall?
A buy wall is a single large buy order or a combination of them that has been placed on a particular asset and represents a large demand for it at a specific price point. The term “wall” is used here because the order appears as a solid line on a chart, effectively “blocking” the price from falling below the specified level.
What You Need To Know About Buy Walls
The buy wall definition is closely related to the sell wall concept, which is a situation where one or multiple large sell orders are placed at the same price level.
Both buy walls and sell walls are used as a means to manipulate the market and control the pricing of certain assets in one’s favor. They can be created by whales (large crypto holders) as well as groups of traders or institutions. But how exactly does a buy wall work? Let’s take a look at an example.
If someone creates a buy wall for Bitcoin at a $5,000.00 mark, other traders who are willing to obtain BTC are likely to place their orders at a higher price, such as $5,000.01 or above. This is because there is a low likelihood that their orders will be filled if they feature a price below the existing “wall” of buy orders at $4,999.99 or less.
A buy wall usually only lasts for a relatively short period of time and doesn’t result in all orders being filled. It can also move up or down as market conditions change, which is often due to the activity of trading bots.
Note that, although less common, it is possible for all orders of a buy wall to be fulfilled in a matter of seconds during a strong bearish market trend.
