Buy Wall

Understanding the Concept of a Buy Wall

When it comes to cryptocurrency exchanges, the majority of them rely on an order book to facilitate transactions between traders. This order book consists of buy and sell orders placed by traders, with each order representing a request to buy or sell a specific amount of cryptocurrency at a particular price.

Once these orders are placed, the exchange matches buy and sell orders with similar prices, executing them either partially or in full based on the quantity of coins involved in each order.

A buy wall refers to a scenario where a substantial limit order is placed to purchase a cryptocurrency once it reaches a predetermined value. Traders sometimes utilize this strategy to create a certain perception in the market, preventing the cryptocurrency from dropping below that value. This is because when the order is executed, the demand for the cryptocurrency is likely to exceed the available supply. Typically, a buy wall is established by a buy limit order for a significantly large quantity of coins, often placed by a cryptocurrency whale.

In essence, a buy wall acts as a barrier, preventing the price of the asset from falling below a specific threshold. Sellers have no logical incentive to sell their assets at a price lower than what the existing unfulfilled buy wall offers. Buy walls can serve various purposes, including:

• Acquiring a substantial amount of a particular cryptocurrency, especially when the buyer holds a bullish view on its future.
• Engaging in price manipulation, where a whale who possesses a significant amount of a specific cryptocurrency aims to safeguard the public perception of their asset. They achieve this by purchasing additional coins and artificially boosting the price, creating the illusion of a healthier asset than it truly is.