How do you read a crypto depth chart?

A crypto depth chart shows how much of a coin people are waiting to buy and sell at each price on one exchange. It turns the long list of numbers in an order book into two curves, which makes it quicker to see where orders are thick and where they are thin.

How do you read a crypto depth chart?

Coinbase describes the layout this way. Prices run along the horizontal axis, rising from left to right. The vertical axis shows the cumulative amount of the coin on offer. The green line on the left is bids, and the red line on the right is asks.

The middle of the chart is the current mid-market price. The gap between the highest bid and the lowest ask is the spread, covered in more detail in what is a bid-ask spread.

Each curve climbs as it moves away from the middle because it adds up every order closer to the current price. So reading the green line at a given price tells you roughly how much would have to be sold to push the price down that far. Reading the red line tells you how much buying it would take to push the price up to that level.

What are bid and ask walls?

A wall is a sharp vertical jump in one of the curves, meaning a large amount is waiting at a single price. Coinbase says a buy wall may act as support, a level where buying could slow a fall, and a sell wall may act as resistance. Kraken's guide to its Pro charts makes a similar point and adds that a thin book may mean higher volatility.

Walls are not fixed. Anyone who placed an order can cancel it. US commodities law, as summarized by the CFTC, bans spoofing, defined as placing bids or offers with the intent to cancel them before they execute. The guide to spoofing in crypto trading explains how fake walls are used to mislead other traders.

What does market depth mean in crypto?

Market depth is how much can trade near the current price before that price moves much. A steep, tall pair of curves close to the middle points to a deep market. Flat curves mean a large order would eat through several price levels, which causes slippage.

Kraken's blog warns that depth on its own does not prove a market is liquid. Its example is a book with large orders far above and far below fair value but nothing in between. The useful depth is the part near the current price.

What is the difference between a depth chart and an order book?

Both show the same data. The order book lists each price level and its size in rows, which is precise but hard to scan. The depth chart adds those rows up and plots them, which makes the overall shape easy to see but hides individual orders.

Either view covers a single exchange at a single moment. Other platforms have their own books, and the picture can change within seconds.