A situation where a large limit order has been placed to sell when a cryptocurrency reaches a certain value.
A sell wall is a significantly large sell order(s) placed at any price level, which can likely cause the price to drop substantially. It can be placed by anyone, especially high-net worth individuals or whales to manipulate asset prices to their advantage, although others can also help add to that order.
These so-called whales are able to manipulate the prices because of their large holdings or units of an asset. Sell walls can suppress asset prices and force them to be traded within a certain range. They work by indicating to other traders that the price can’t proceed further from a level without passing significant resistance.
When placed intentionally by large holders or whales, it’s often put without any intention to buy from other traders at such levels, but rather to bluff others to place their sell orders below the wall, causing downward price movement.
A massive sell wall indicates that the available supply will soon increase once a certain price is right, thereby driving down both demand and price. Traders then preemptively choose to not buy at that price or to sell off their asset at a lower price, creating shorting opportunities for whales.
Sell walls can be placed and removed continuously on the order book by whales for price manipulation, and most exchanges have interactive depth charts to indicate buy and sell walls.
A buy wall is the opposite of a sell wall, which can provide support and cause the price to move upwards.