Bitcoin Forum

I see the red is the sellers and the green is the buyers bids. If the green side is tall doesnt that mean lots of people want to buy btc and price should in the very short term go up, and opposite if the red side is tall and green side short? What happens when they are both tall or both short? I watched videos but then when I look at real BTC trading on 5min mark it seems like there is no correlation.

A tall buy wall just means that there are tons of BTC buy orders at a certain price, and a tall sell wall just means that there are tons of BTC sell orders at a certain price. None of which guarantees a certain price movement after a certain timespan.

That's why depth charts often are in a sort of "steps" formation. Simply because as bitcoin reaches a certain lower price, there will be more buyers hence the taller wall, and vice versa.

In general, a taller wall just mostly means a bigger price support.

you have to remember that it is speculation not future telling. seeing a big wall means there is resistance against moving in that direction. the bigger the wall the bigger the opposition is going to be. but it is not guaranteed because nothing is forcing all of those individual traders to keep their orders open. they can close them at any time (before they are filled) and effectively remove the "wall". and since this last part is not what we can predict, we can't predict how the price is going to react.

for example one form of manipulation these days that price is slowly rising is for some whales place big orders at higher prices. for example now that price is $37030 they place big walls on $37100 to make it appear so that there is a big resistance and price won't go up. then price goes up to $37090 and the wall is immediately moved to $37190. price goes to $37230 the wall moves to $37310 and so on.

Sometimes, some whale also creates fake buy order to give false impression of buying wall or the vice versa of sale wall. In theory, it should be an indicator where price is going to but technically that can be faked. In addition, you have to check the distance of price in which people have put buy order. For example, a coin with current price of 1000 satoshi may have a big bug order at 100 satoshi which is very unlikely to fill. Therefore, the order has put only to give fake impression.

the chart is the interpretation of whats happening in the market. the red side is the volume of the sellers and the green stands for the buyers. the interractions between buyer and seller is what is represented in the time frame of 1hr, 2hrs, 4hrs, and so on. you use this to read and predict what will happen based on what has happened in the past.

Those depth charts mean nothing so don't bother following them so much because traders place and remove orders at anytime the feel like. So, high buy or sell wall can appear and disappear at anytime. Certain exchanges also do have traders who use bots to place and cancel orders. So as the price of the coin shifts, orders are cancelled and new one are placed making the buy and sell walls also to shift, therefore you won't see and serious correlations between the depth chart and price movements. I prefer looking at price action to the depth.

Thanks mk4 for the explanation. To be very simple and clear, let's say if you see more green color this mean there is more amount of money on buy/demand orders than sell orders and that's how can we say price can rise. For example, if you look at the BTC/USDT chart and see there is more buy volume than sell, this mean there is more USDT on the orderbook waiting to be exchanged for BTC. However the trading volume values changes rapidly and you can not only use this method predict the price.

Lets use this pic as an example assuming everyone keeps their orders and no whales are manipulating, what would the general price trend be? Since there are alot of buyers the price will go up soon? Lots of green = lots of demand?

I don't think you can really make price trend conclusions off order book depth alone.

The "demand" wouldn't matter that much if the price doesn't reach that buy/sell wall in the first place. (e.g. what would be the HUGE demand at $20,000 be if the price didn't end up going down that low anyway?)