KoinlyticsAn order book is a live ledger of unfilled orders. Bids on the left (buyers), asks on the right (sellers), sorted by price. The best bid is the highest a buyer will pay, the best ask is the lowest a seller will accept. The gap between them is the spread.
What each level tells you
- Best bid / ask. The market price right now.
- Spread. Liquidity indicator. Tight spread = deep liquidity. Wide spread = thin.
- Depth. Total volume within 1% of mid. Deep books absorb size without moving. Thin books move on medium orders.
- Imbalance. Way more bids than asks near mid = pressure up. Reverse for down.
Iceberg and hidden orders
Institutions do not want to show $50M of buy interest at $30k. It moves the market against them. They use iceberg orders: only $500k visible; when it fills, another $500k appears. Onchain: harder to hide. CEXs: standard.
Spoofing
Placing large orders you do not intend to fill, hoping to move price, then canceling. Illegal on regulated venues, still happens on unregulated. Signs: sudden appearance of large orders at odd levels that vanish before hitting.
Absorption
When a large sell order gets eaten by resting buy interest without price dropping, buyers are absorbing supply. Same idea reversed for buys. Often a precursor to reversal.
What onchain looks like
AMMs have no order book. Hyperliquid, dYdX, and vertex expose real order books onchain. Depth on the top perp DEXs is now comparable to mid-tier CEXs and much more transparent (you can see every level's history).
Quick habits
- Before entering a position: check spread and 1% depth. Thin? Reduce size.
- Before market-buying: see what price your order will fill at if it eats the top 3 levels.
- During news: books thin out. Don't market order into news.