Assuming an asset's single displayed ticker price represents the universal cost for any order size overlooks the fundamental reality of order book depth. For instance, Bitcoin currently changes hands at $82,216.30, yet executing a substantial trade requires traversing multiple price tiers.
This dynamic, known as slippage, occurs because liquidity is distributed across a bid-ask spread rather than concentrated at a single coordinate. As order volume increases, the realized execution average deviates further from the baseline quote.
Understanding this distribution clarifies why high headline volume alone does not guarantee uniform execution efficiency across different sizing tiers. #CryptoEducation #MarketStructure
This dynamic, known as slippage, occurs because liquidity is distributed across a bid-ask spread rather than concentrated at a single coordinate. As order volume increases, the realized execution average deviates further from the baseline quote.
Understanding this distribution clarifies why high headline volume alone does not guarantee uniform execution efficiency across different sizing tiers. #CryptoEducation #MarketStructure