Sell Wall: Understanding Its Role in Crypto Trading

A “sell wall” in crypto futures trading refers to the limit of a sell order or a group of sell orders that can be executed at a specified price. This is particularly important in cryptocurrency trading, where volatility is common. A large crypto holder, often referred to as a “whale,” can significantly impact the price of a particular cryptocurrency by selling off a substantial quantity of it. A sell wall represents the size of the order(s) at a particular price level, and an individual can qualify as a whale if they can create a sell wall single-handedly.

What Is A Sell Wall And A Buy Wall?

A buy wall is the limit amount of buy orders a crypto asset can handle at a specific price level. Usually, a buy wall is an organic limit caused by interest in an asset and pushes the price upwards. On the other hand, a sell wall has a negative connotation because the activity of one whale can significantly shake the price of the cryptocurrency.

How Do You Identify Buy And Sell Walls?

Buy and sell walls are essentially support and resistance levels that are created by large orders placed at specific prices on an order book, and they can give you an idea of the supply and demand at different price levels. These orders can be seen on a price chart as large spikes in volume at a particular price level. Buy walls occur when there is more buy order volume than sell order volume at a certain price, indicating that there is strong demand for the asset at that price. This can create a situation where the price is “supported” at that level and is less likely to fall below it. Sell walls occur when there is more sell order volume than buy order volume at a certain price, indicating that there is strong selling pressure at that level. This can create a situation where the price is “resisted” at that level and is less likely to rise above it. 

Are Sell Walls Bullish?

A sell wall can be both bullish or bearish depending on where whales set it. For context, an order book is an electronic record of buy and sell orders before a crypto exchange. It lists the bid prices on listed assets reflecting the activity in real-time. Suppose a crypto whale sells a significant amount going through the sell wall. It can’t be a good thing overall. Traders are often careful with using the sell wall because it can be induced artificially. Therefore, it is vital to keep track of other news about the cryptocurrency, which may be the real cause of bullish sentiment. 

What’s The Difference Between Ask And Bid?

The ask price is the lowest price a brokerage is willing to sell an asset. The bid price is the maximum price a trader is willing to pay for the same asset. Ask and bid prices constantly change reflecting the demand and supply dynamics of that asset. 

Is A Sell Wall Good?

A sell wall can be a negative if it allows for easy asset price manipulation by whales. Unfortunately, crypto is rife with pump and dump schemes where whales tinker with prices to sell off at maximum opportunity. These dynamics can be negative in the long-term for that virtual currency.