Buy Wall

What Is a Buy Wall?

A buy wall is the consequence of a single large buy order or the combination of numerous large buy orders placed in the order book from a particular market at the same price. A rich person, group of traders, or institution can construct a buy wall. 

For example, trading on cryptocurrency exchanges takes place through an order book, in which buyers declare their buying prices (bids) and sellers indicate their selling prices (asks). Essentially, buy walls keep market prices from falling because they generate vast orders around the same price, requiring enormous sums of money to be completed and passed over.

Exploring the Full Scope of a Buy Wall

Buy or sell walls typically develop when significant owners (whales) of any cryptocurrency seek to manipulate the pricing to their advantage. As a result, whale traders frequently construct buy and sell barriers to use markets. When a large buy or sell orders emerge in the order book, several traders typically put their orders immediately after the walls. 

For example, if a large buy wall for Bitcoin is set at $5,000.00, other traders who want to buy will often sell their product at $5,000.01 or higher. They usually do this because they feel there is very little chance that their orders will be filled if they are placed simultaneously behind the wall (for $4,999.99 or less).

In reality, though, most buy and sell barriers occur for a brief time, and their orders aren't really filled. It is also typical to watch the buy and sell walls move up and down in response to market changes. Again, trading bots (automated trading algorithms) are most likely to blame. Although it is less usual, when a bearish market decline is incredibly powerful, buy walls can be quickly "eaten up," with all orders being filled in a matter of a few seconds.