What Is a Buy Wall?

The vast majority of cryptocurrency exchanges facilitate deals between traders through the use of a central limit order book (CLOB) — a system to match buy and sell orders placed by traders based on best prices. This system is also used by stock exchanges like the New York Stock Exchange (NYSE).

An individual order is a request to buy or sell a certain amount of cryptocurrency at a certain price. For instance, say you want to buy Bitcoin. You will place a buy order on the exchange for the price you are willing to pay, and the quantity of Bitcoin you want to buy. The exchange will then place your order into the order book, which contains all orders made by other traders and is public for all to view. The exchange will then match your buy order with users who want to sell, filling the orders at each price point and quantity available. You can also choose to fill your buy or sell orders at the best possible market price, which the CLOB will immediately fill based on existing orders.

A buy wall is a situation where a large limit order has been placed to buy when a cryptocurrency reaches a certain value. This can sometimes be used by traders to create a certain impression in the market, preventing a cryptocurrency from falling below that value, as demand will likely outstrip supply when the order is executed. Often a buy wall is created by a buy limit order for a disproportionately large amount of coins placed by a cryptocurrency whale.

In a way, it “blocks” the price of the asset from going below a certain threshold: there is no rational reason for sellers to offload their assets at a price lower than what the already existing unfulfilled buy wall offers to purchase at. Buy walls can be created for different purposes.

One of them is simply to acquire a large amount of a certain cryptocurrency in cases where the buyer is bullish on it.

Another possible reason for placing a buy wall is price manipulation — a whale who holds a large amount of a certain cryptocurrency might be concerned with the public image of their asset. Consequently, they use their resources to simultaneously buy more coins and prop up the price, making the asset appear more healthy than it actually is.