Lesson 5 of 6 10 min read
Liquidity and how price moves
The order book, buyers vs sellers, and why moves happen fast.
The order book
Resting limit orders form the book: bids below price, asks above. Price moves when market orders eat through one side.
Thin vs deep markets
Deep markets (BTC, ETH) absorb large orders with small moves. Thin markets (small caps) can jump or crash on modest volume — riskier to trade in size.
Liquidations
When leveraged traders are forced out, their positions close at market, pushing price further. This is why crypto sometimes moves violently in minutes.
Key takeaways
- Price moves when one side of the book is consumed.
- Small caps are thin — size down.
- Forced liquidations cause sharp spikes.
Exercise
Open the order book for BTC and a small-cap coin. Compare how much $50k of buying would move each.
Educational content only, not financial advice. Crypto is volatile and you can lose money.