Bid/Ask — Spread analysis
Monitoring the difference between the best buy and sell prices on crypto exchanges. The spread and bid/ask imbalance reveal the true pressure from major market participants.
Bid/Ask balance by exchanges (BTC)
| Exchange | Bid volume | Ask for volume | Ratio | Spread |
|---|---|---|---|---|
| Binance | $48M | $39M | 1.23 | 0.01% |
| OKX | $22M | $18M | 1.22 | 0.01% |
| Bybit | $15M | $12M | 1.25 | 0.02% |
What does Bid/Ask analysis show for Bitcoin?
Bid/Ask analysis is the study of the balance between buy (bid) and sell (ask) orders in the order book. A ratio above 1.0 indicates that the volume of buy orders exceeds the volume of sell orders—buyers are crowding in, and the market is bullish. A ratio below 1.0 indicates that sellers are pressuring.
Spread is the difference between the best bid and the best ask. In liquid markets, the spread is typically 0.01%. A widening spread signals a drop in liquidity: market makers have withdrawn from the order book, and the market can move sharply in either direction. In November 2022 (the FTX crash), the spread did not reach 0.15%—market makers withdrew liquidity, expecting chaos.
A bid/ask imbalance at a depth of 2% of the current price shows where large limit orders are located. If the bid is $200M and the ask is $80M, the market will move higher more easily. The "wall" below supports the price. But be careful: large participants can move orders (spoofing), creating the illusion of support.
Bid/Ask signals and their interpretation
Bid/Ask Ratio > 1.3
A strong buyer predominance in the order book. This is a bullish signal, especially when combined with a rising price. However, if the ratio is high and the price isn't rising, it means someone big is selling into the market via market orders.
Bid/Ask Ratio < 0.7
Sellers dominate the order book. This is a bearish signal. Ask volume significantly exceeds bid volume, making it easier for the market to move lower. Resistance levels are denser than support levels.
Spread widening
Market makers retreat from the order book. Liquidity declines. Any large market order will cause increased slippage. This often precedes a sharp price move.
Large bid wall
Large volume at one bid level is potential support. A large participant is defending the level. However, spoofing is possible: the order will be cancelled as the price approaches.