Sell Wall
Sell Wall Key Points
- A sell wall is a situation that occurs in the cryptocurrency market where a large limit order has been placed to sell a particular cryptocurrency.
- It is often visualized on a depth chart, forming a wall-like appearance due to the large volume of sell orders at a certain price point.
- Sell walls can influence the price of a cryptocurrency as they represent a surplus of supply, often preventing the price from rising above the wall.
- While some sell walls are genuine, others may be a market manipulation strategy used by large traders, also known as ‘whales’.
Sell Wall Definition
A sell wall is a term used in the cryptocurrency and blockchain market to denote a situation where a large limit order or series of orders are set to sell a certain cryptocurrency.
It is typically visualized on a depth chart, showing a significant number of sell orders at a specific price point.
Sell walls can have a notable impact on the price of a cryptocurrency, often preventing it from surpassing the wall until the orders are filled or removed.
What is a Sell Wall?
A sell wall is a concept from the world of cryptocurrency trading.
It refers to a situation where a large quantity of a specific cryptocurrency is set to be sold at a certain price point.
When viewed on a depth chart, these large orders create a “wall” that can prevent the price of the cryptocurrency from rising further until the wall is either removed or the sell orders are fulfilled.
Who Uses a Sell Wall?
Both small-scale traders and large-scale traders, often referred to as ‘whales’, use sell walls.
However, it’s crucial to note that while some traders use sell walls as a genuine strategy, others may use them as a market manipulation tactic.
By creating a sell wall, these large traders can keep the price of a cryptocurrency artificially low, allowing them to accumulate more of it at a reduced price.
When is a Sell Wall Used?
A sell wall is used when a trader or group of traders decide to sell a large quantity of a cryptocurrency at a specific price point.
This usually happens when the trader believes that the price of the cryptocurrency will not rise above a certain level, or when they want to manipulate the market to their advantage.
Where Can You See a Sell Wall?
Sell walls can be seen on a depth chart, which is a graphical representation of the supply and demand of a specific cryptocurrency.
The x-axis represents the price, and the y-axis represents the number of coins to be bought or sold at that price.
A sell wall appears as a vertical line on the chart, indicating a large amount of sell orders at a particular price point.
Why are Sell Walls Important?
Sell walls are important because they can significantly affect the price of a cryptocurrency.
A large sell wall can prevent the price of a cryptocurrency from rising further, as the wall needs to be fulfilled or removed for the price to increase.
This can be particularly impactful in smaller, less liquid markets where such a wall represents a larger proportion of the total market volume.
How Does a Sell Wall Work?
A sell wall works by placing a large amount of sell orders at a certain price point.
This creates a ‘wall’ that needs to be ‘climbed’ or ‘broken down’ by buy orders before the price can rise.
If the wall is large enough, it can discourage buyers, keeping the price low and potentially allowing the wall’s creator to accumulate more of the cryptocurrency at a lower price.