I'm going to help explain this phenomena, because this is how big players enter or exit a market. This is how they create the liquidity they need, while eliminating the slippage which they don't want. I've had a few people lately that completely didn't understand this, and I figured there could be a lot of new investors (not just crypto, but market investors) that could benefit from a thorough explanation of this maneuver.This isnt about trying to make a profit. It's not a day trading tool. It's a market entrance tool (sell wall) or a market exit tool (buy wall).Lets talk sell walls first.You are trying to buy as much as you can without moving the price. Your goal is to lower the average value of a massive 10 million dollar buy. So you spend 1M over the counter and put it up as a sell wall, then buy the next 10M from people undercutting your sell wall, scared because they think it's insane selling pressure. Its not, it just looks like it. You open up liquidity by panicking people who are now selling into you. You may lose that 1M sell wall, but in the time you do, you picked up 10M off of the undercutters, and you did it without raising the price of the commodity you were buying, which you would have done if you just market bought 10M. Sure you would love to OTC buy 10M, but if only 1M is available, then this is how you leverage that first 1M into 9M more.Again, this is a very well known tool the big players use, and it has nothing to do with crypto. This happens every day in the stock market.It doesnt work in a bull market because people will buy through that 1M wall. But at the same time, you did still manage to lower your entry by scooping up so much as you could, even if that was only 1.5M it still worked.In a bear market, or sideways market (and your wall in and of itself creates stability until it's broken through), you can pick up way more than your wall, just by slurping up undercutters.It's a tactic that is as old as markets have existed. It's not some fantasy I thought up, it happens every single day, especially in smaller markets like crypto. Crypto is growing and volume is impressive, but it's still peanuts compared to trying to do that with amazon stock, or gold, etc.So it works best in sideways or slightly bearish markets. It is a massive sell wall that looks terrifying, but in reality it is actually a very bullish indicator. And this isnt just me and my opinion, go look up "are sell walls bearish or bullish".The opposite is true too...Buy wallsA massive buy wall looks like someone really wants in (and it might be as simple as that), and it looks like the price wont fall lower because it has to penetrate that wall. In reality, if the buy wall is some whale who is using 1M capital to keep the price high while he sells his 10M stack to people leaping him to buy, then it's actually a large buy wall but what is really happening is 10M worth of sell pressure. He is trying to exit 10M position without crashing the price as he does. Then once his 10M is gone, he just pulls whatever is remaining of the buy wall down, market sells that and he exited without moving the price much.I know that was a wall of text but hopefully that explains buy and sell walls and why they are often seen as opposite signs of what you initially would think of them as. This is relevant to the stock market, not just crypto.
Submitted January 19, 2019 at 10:46PM
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