What is a sell wall?
A sell wall is a tool used by a rich individual/whale, to manipulate the price of a cryptocurrency downwards. A large sell order is set at a specific price to prevent higher sell orders from executing.
A sell wall looks like this on the depth chart:
How does it work?
Lets start with an example:
A wealthy person, Peter, tells 2 of his wealthy friends that he wants to make money on a particular crypto. This could be for a number of reasons such as:
- The crypto can be easily manipulated
- The crypto has a lot of potential to get big in the near future
Peter and his 2 friends decide that it's a good idea. They all want 1 million of X cryptocurrency. In the cryptocurrency market Peter and his friends can't execute all the buy orders at once or the prices will skyrocket!
The entire process is done in 6 steps:
1- First small buy. They will buy 200,000 of X crypto each during some time so it doesn't affect the price.
2- Set the sell wall. They now set a specific price they feel is low enough for them to be able to buy their 1Million X crypto. For this particular crypto they decide to all sell their obtained crypto at $1.80.
3- Sell wall in place. Between all the 3, there is 600k dollars worth of X crypto selling for @1.80. This constitutes so much volume being sold, that the buying pressure from others cannot buy all that wall in a reasonable time frame (it is possible, but it would take a very high buying pressure to do so that would only appear with this crypto being added to a new exchange or the announcement of a new partnership).
4- The price goes down. Since nobody else can sell above that sell wall price until it's gone, people need to sell lower than the sell wall which drives the price downwards.
5- Buy the 1M crypto X. Peter and his 2 friends can now accumulate 1M X crypto each without raising the price exponentially.
6- Take down the sell wall. After accumulating 1M X, they decide to get rid of their sell walls and the price will finally move up.
How can you use this to your advantage?
A common thought is that the main goal of a sell wall is to create fear into the weaker hands so that they sell by the thought that "Everyone is selling!!". People get nervous when there is a large volume of crypto being sold.
To take advantage of sell walls just act accordingly
First find a sell wall. Are there any great projects, that solve a real need with good technology, getting seemingly great news without moving in price? Take a look at the depth charts on the exchanges to verify if there is actually a big sell wall. Then just buy how much you are willing to invest (and are willing to lose without a problem, remember: crypto is a risky investment) and hodl until the whales finish to accumulate. The wait is almost always worth it because price will rise very rapidly once selling pressure is completely abolished.
Take into consideration that this does not represent financial advise. Do your own research before investing.
Thank you for reading and do not forget to support the blockchain revolution!
This post was written to be part of the blog of CryptoBillionaire - The Original Crypto Shirts
Credits to reddit user Tilted_Till_Tuesday for his reddit post which was the basis for this article.