Ethereum: What is an offer wall?

In the Bitcointalk forums, a popular online community for cryptocurrency enthusiasts, a term has gained significant attention lately: “Bid Wall”. Despite being relatively new in the cryptocurrency market, offers walls have caught the attention of merchants and analysts equally. But what are exactly and how do they work?

What is an offer wall?

An supply wall refers to an artificial barrier that artificially restricts or inflates the price of a particular cryptocurrency asset in a specific exchange, such as Ethereum. When there is an offer wall, it creates a psychological barrier for potential buyers, making them doubt to enter the market at the current price. This can be done by establishing a high minimum purchase order size, increasing the number of tickers shown in the “Buy” section or even introducing a fixed purchase limit.

How do the offer walls work?

To understand how the offer walls work, let’s look at an example:

Suppose we want to enter Ethereum (ETH) in Coinbase and have a minimum purchase order size of 0.1 eth. If you notice that the current price is $ 300, it can assume that it will fall significantly when you try to buy more ETH. However, with an offer wall instead, you can see that your expected fall is completely reduced or eliminated.

Why do investors use offer walls?

Investors use offer walls for several reasons:

* Price manipulation : When creating a psychological barrier, merchants can manipulate the price of an asset and make it difficult for buyers to enter the market.

* Speculation : Merchants may be trying to benefit from future price movements buying and selling high. The offer walls can help them achieve this goal.

* Risk management : Investors can use offers walls as a way of limiting their losses or avoiding significant price drops.

Risks of using offer walls

While offers walls can create an artificial barrier for buyers, they also come with risks:

* Overload : Merchants who buy large amounts of the asset without sufficient liquidity in the market could face serious consequences if prices fall.

* Liquidity restrictions : If many merchants have the same asset, it can lead to greater speculation and decrease in liquidity, which makes it difficult for buyers to enter the market.

Conclusion

Offers walls are an interesting phenomenon in the cryptocurrency market. While they can create artificial barriers that affect price movements, understanding their mechanics is crucial to navigate this ecosystem complex. By understanding how the walls of offers work and understanding their implications, merchants and investors can make more informed decisions about the purchase and sale of assets in several exchanges.

Sources:

• [Bitcointalk forums – IDB Wall] ( ;ip1 ;200)

• [Coingecko-how blog use an offer wall effectively] (