Buy Wall Definition
A Buy Wall is a situation that happens in cryptocurrency trading, where the demand, or buy orders, for a specific cryptocurrency are sufficiently high enough to make it difficult for that cryptocurrency’s price to fall below a certain point. Essentially, it is a large number of buy orders set at a specific price point on a trading platform exchange.
Buy Wall Key Points
- A Buy Wall refers to a substantial number of buy orders for a cryptocurrency at a specific price level.
- When buy orders substantially outweigh sell orders, a buy wall is created.
- Buy walls can significantly influence price movements and create price support levels in the market.
- Market participants and automated trading algorithms utilize buy walls for strategic trading.
What is a Buy Wall?
A Buy Wall is simply an imbalance in market supply and demand characterized by a significantly higher number of buy orders than sell orders at a specific price point on a cryptocurrency exchange. This creates the visual metaphor of a ‘wall’ when viewing the depth chart of orders.
Why is a Buy Wall important?
A Buy Wall is fundamentally significant for traders as it provides a sense of possible future market movements. It serves as a price support level preventing the cryptocurrency price from falling below the buy wall level, unless the number of sell orders surpasses it. Consequently, buy walls can be strategically placed to create investor confidence in a cryptocurrency by maintaining a steady or increasing price.
When does a Buy Wall occur?
A Buy Wall occurs when there’s a large number of buy orders placed at the same price point on a cryptocurrency exchange. It usually happens during market uncertainty when investors purposefully place large buy orders to prevent the price from going down.
Who uses the concept of a Buy Wall?
Traders, investors and even cryptocurrency projects themselves use the concept of a Buy Wall to make informed decisions regarding the buying, selling, and holding of cryptocurrencies. Automated trading algorithms may also take buy walls into account when making trades.
How is a Buy Wall created?
A Buy Wall is created when either a single investor or a group of investors place significantly substantial buy orders at the same price point on a cryptocurrency exchange. This creates a scenario where the number of buy orders outweighs the number of sell orders, thus forming a buy wall. Sometimes, this wall is an economic strategy used by large scale investors, also known as whales, in order to manipulate the market.
