Spread in Crypto – Basic Explanation
In the cryptocurrency market, there is also the concept of “spread.”
The spread refers to the difference between the buying price (or “bid”) and the selling price (or “ask”) of a financial asset. It is a measure of liquidity and the costs associated with executing a trade.
In the context of the crypto market:
Buying Price (Bid): This is the price at which buyers are willing to acquire a cryptocurrency.
Selling Price (Ask): This is the price at which sellers are willing to sell the same cryptocurrency.
Spread: It is the difference between the buying price and the selling price. The narrower the spread, generally the better for traders, as it implies lower transaction costs.
A wider spread may indicate lower liquidity in the market or higher volatility. Spreads tend to be narrower in highly liquid markets, where there are a large number of buyers and sellers.
