The bases of the market depth: analyze the books of orders in cryptocurrency
The cryptocurrency has recorded rapid growth and adoption in the last ten years, with prices that float wildly based on the feeling of the market. To understand how cryptocurrencies exchange and make informed investment decisions, it is essential to grasp the concept of market depth and its analysis through the books of orders. In this article, we will deepen the foundations of the market depth and explore what the orders books reveal cryptocurrency on the markets.
What is the depth of the market?
The depth of the market refers to the amount of the purchase and sale orders included over time in a given price range or activity. It is measured by the number of operations performed at specific prices within this interval. In other words, it represents the volume of market activity in different points over time. The high depth of the market indicates strong volumes of trading and liquidity, while low depths suggest a limited demand or demand.
Order books: the heart of the depth of the market
A book of orders is a visual representation of the purchase and sale orders made by traders and institutions over time. Usually it is displayed as a grid with columns for the price of the asset (for example Bitcoin), the amount of purchases and the amount of sales. Each line in the column represents a specific market depth value.
Components of an orders book
A book of order generally consists of several key components:
- MARKING DEPTS : the number of operations performed at each price level.
- average price : the average price reached by the highest trade in a certain interval.
- Maximum price : the maximum price reached by any trade in a certain interval.
- Minimum price : the minimum price reached by any operation in a certain interval.
Analysis of orders books
When analyzing the books of orders, traders and investors can obtain valuable information on the feeling and liquidity of the market. Here are some key takeaways:
- Deep market elastic : indicates a strong purchase pressure or high liquidity, often accompanied by low prices.
- Low market depth : suggests a limited demand or demand, with the potential for significant price oscillations.
- Trendy changes : changes to the data book data may indicate changes in the feeling of the market or in the technical analysis models.
- order flow : the analysis of the order flow can reveal information on the trader’s behavior and market expectations.
Examples of analysis of the book of orders
Here are some examples to illustrate how the orders books provide valuable information:
- Bitcoin (BTC)
| Price | Quantity | Average price |
| — | — | — |
| 30k | 100.000 | $ 22,500 |
| 50k | 150.000 | $ 25,200 |
| 70k | 200.000 | $ 28,800 |
In this example, the orders book shows a high volume of purchases at prices ranging from $ 22,500 to $ 28,800, with an average price of $ 26,000. This suggests strong purchase and liquidity pressure.
- Ethereum (eth)
| Price | Quantity | Average price |
| — | — | — |
| 1k | 50.000 | $ 200 |
| 20k | 75.000 | $ 250 |
| 100k | 125.000 | $ 350 |
In this example, the order book shows a high selling volume at prices ranging from $ 200 to $ 350, with an average price of $ 275. This indicates a strong sales and liquidity pressure.
Conclusion
Understanding the depth of the market and analyzing orders books through visual tools such as graphic and graphic designers can provide valuable information on cryptocurrency markets. By examining the changes in the book data, traders and investors can obtain a better understanding of the models of feeling, liquidity and technical analysis of the market. While the panorama of the cryptocurrency continues to evolve, it is essential to remain informed about the depths of the market and the analysis of the book order to make more informed investment decisions.
Recommended resources
- TradingView: a popular platform to view orders books and analyze the depth of the market.
- Cryptocompare: a website that offers real -time data on the cryptocurrency markets and orders’ books.