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What is the difference between the ask and bid price in cryptocurrency trading?

avatarJayanth NevooriDec 26, 2021 · 3 years ago1 answers

Can you explain the distinction between the ask price and the bid price in cryptocurrency trading? How do they affect the buying and selling process?

What is the difference between the ask and bid price in cryptocurrency trading?

1 answers

  • avatarDec 26, 2021 · 3 years ago
    In cryptocurrency trading, the ask price is the price at which sellers are willing to sell their cryptocurrencies, while the bid price is the price at which buyers are willing to buy the cryptocurrencies. The ask price is always higher than the bid price, and the difference between the two is known as the spread. The spread represents the cost of trading and is essentially the profit for the market makers. When the spread is narrow, it means that there is high liquidity in the market, and traders can buy or sell cryptocurrencies at a lower cost. On the other hand, when the spread is wide, it indicates low liquidity, and traders may have to pay a higher cost to buy or sell cryptocurrencies. It's important for traders to understand the ask and bid price as it can impact their trading decisions and overall profitability.