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In This Issue:
- The Truth About Buy And Sell Walls
- Bitcoin Thoughts And Analysis
- Legacy Markets
- Elon Musk Vs. Twitter Bots
- The Crypto Bill Is Here
- The SEC Is Reportedly Investigating BNB
- The Wolf Of All Streets Podcast Ft. Peter Wall
- My Recommended Platforms And Tools
With every major Bitcoin move, there is increasing chatter around the importance of massive buy and sell walls on exchanges. If you are not familiar with the terms, these are huge orders sitting in the order book.
Nobody is doubting the significance of psychological levels like 20K, 50K, or 100K, where traders congest the order book with bids and asks, That said, a lot of the information we hear about buy and sell walls is incorrect.
Most think of sell walls as being bearish and buy walls as being bullish. They believe that a huge sell order means that price is going to go down, because a whale is looking to exit. They believe that a huge buy order is bullish because someone is looking to gain maximum exposure to the asset.
If you believe this, you are buying into the story that the whales are trying to tell you. A sell wall most often stops price so that someone can BUY. A buy wall holds it up so that they can finish SELLING.
Entering an order that you do not intend to fill in order to manipulate price action is illegal in legacy markets. Since we are trading in the wild west, it’s perfectly acceptable behavior in crypto. It is called “spoofing.”
If you truly are trying to sell a large quantity of an asset, you would never put up a huge sell order. It’s against your own interest because you are stopping price and scaring buyers. Real sellers sell in smaller chunks over time as the price is rising. Real buyers do the same, to avoid pushing price higher.
This strategy was publicly proven when Michael Saylor explained how he bought hundreds of millions worth of Bitcoin over a few days in tiny increments, so as to avoid impacting the price. Imagine if he dropped his full order onto the market. It would never fill at his desired price.
You do not need to watch order books. It’s more likely to confuse you than to help unless you are a pro and this is the core of your strategy.
Just trade the chart.