What is the Bitcoin Depth Chart?
The depth chart is a frequently changing screen that shows the number of buy and sell orders, how much at what price. These assets include cryptocurrencies, stocks, and other variables. It can usually be examined in detail on the Pro-View screens on exchanges.
The buy and sell orders seen in the depth screen are not necessarily executed orders. For example, in the depth analysis, you can see that a very loaded buy order is entered in the buy section. This is a positive situation for
Bitcoin
if the order is executed, but the order holder can cancel the order before the buy order is executed. As a result, although the loaded buy order appears, in reality very little of it may have been executed. The orders entered by the investors do not have to be fulfilled once. As a result, buyers and sellers are brought together in exchanges and orders are met mutually. In the absence of sellers, especially during recession periods, the depth chart does not draw a very active course. To give an example in this regard, there is 1 Bitcoin buy order of $16,900 in the top position of buy orders on the Bitcoin board. In order for this transaction to take place in its entirety, an investor must sell at least the same amount.
When 0.5 Bitcoin is sold at $16,900, half of the buy order will have been executed. For this reason, the orders entered can be executed at once or with more than one transaction. Depth charts allow you to stay informed about demand and supply. It provides a simple visualization of both of these factors in relation to a particular stock, cryptocurrency, or commodity. These custom charts show supply and demand at different prices.
How to Interpret the Bitcoin Depth Chart?
Markets are platforms where buyers and sellers face each other. While each buyer is effective in the formation of demand, each seller contributes to the amount of supply in the market. As a result of this process, the market price occurs with the intersection of supply and demand.
For convenience on the Bitcoin depth chart, all orders that share the same price are displayed only once. Essentially, depth charts aggregate all orders with the same price. The quantities of orders placed at that price level are aggregated and displayed in a single line. The levels at which investors are concentrated are displayed at these order points. In particular, according to the support resistance points, traders enter their orders. One of the most important issues that can be considered in the Bitcoin depth chart is the large number of orders and the large amounts in terms of value.
Since a whale transaction can upset the entire depth chart, it is necessary to pay attention to how many orders at what price on the traded screens. If there are many pending orders in the buy, the prices show a stronger resistance to falling, and if there are many pending orders in the sell, the prices show a stronger resistance to the rise. The presence of voluminous orders makes it difficult to pass the level up or down in pending orders.
