What is the Bitcoin Market Depth in Trading?
Bitcoin, to some, is an investment to be held as digital gold, storing value over the long haul.
For others, however, Bitcoin is another tradable asset that can be flipped for even more gains while enjoying capital gains at the same time.
This is why having a clear picture of the 'Bitcoin market depth' is important for cryptocurrency traders.
In trading circles, the market depth of any asset is a tool. Using this tool, traders can understand the asset's supply-demand dynamics at a given moment within a given range of prices.
The market depth is nothing more but a visual representation of an order book. There will be a list of pending buy and sell orders at varying price levels at a particular point in time. However, the dynamic and fragmentation of the crypto markets mean not all exchanges will have similar market depths.
All the same, it is still critical to understand the various components of the market depth. For any visual representation, there will be bid and ask lines—revealing the accumulated bids and asks at a given price point--, the horizontal axis which shows the respective price points of buy or sell orders, and the vertical axis which shows the aggregated dollar value of all BTC buy and sell orders.