A sell wall is a powerful means of market manipulation. Check out the explanation below to understand how it works!
What Is A Sell Wall?
The term “sell wall” refers to an extra large limit sell order or a combination of sell orders at a specific price level on an order book, often substantial enough to manipulate the market.
What You Need To Know About A Sell Wall
As you can see from the sell wall definition, it’s an order that can be created by a single trader or with the combined efforts of multiple entities. Typically, when a sell wall is the result of one trader’s activity, this individual is called a whale. Due to their large crypto holdings, whales can influence asset prices, often by using sell walls.
For instance, if a trader creates a sell order of 10,000 BTC at $7,000, the order book will display a big sell wall. As a result, it would most likely prevent bitcoin’s price from rising and would require strong buying pressure and significant funds to breach the sell wall and the $7,000 resistance.
Note that in most cases the goal of a sell wall is to cause certain impressions or scare away other traders, which means that such orders are hardly ever filled entirely. For example, a sell wall may prompt traders to place their selling orders below the set price, which could cause a downward trend.
What’s more, whales can also place and remove sell walls multiple times to manipulate the price of an asset.
One way to detect sell walls is to examine depth charts, which are available on most trading platforms. They offer an illustration of the current order book, featuring all buying and selling orders within a specific range.
