What is an Iceberg Order and Why is it Important in Crypto?

credit – Crypto Adventure

Cetoex News – The cryptocurrency market is extremely volatile, and it faces regular periods of uncertainty and panic. In such instances, an investor might feel the urge to pull their investments, and in some cases, very large ones. An ill-informed decision could hamper the investor’s strategy and also the crypto markets. This is where Iceberg orders come in.

A market player who methodically performs a sequence of transactions while following a logical and strategic plan creates an iceberg order. For simplicity’s sake, we may think of an “iceberg order” as a large trading order that has been broken up into several smaller ones. It is simpler and more lucrative to execute multiple small-value orders than it is to dump a large transaction. It is similar to how only the tip of an iceberg is visible.

Consider the cryptocurrency market and the situation where an investor needs to acquire or sell 50,000 Bitcoin. Since every transaction is recorded on the blockchain, the entire amount will always be noticeable in the order books. A transaction of this magnitude would also be detrimental to the overall cryptocurrency market.

The investor needs to split that same order into smaller chunks to soothe this situation. This will not cause panic among traders and investors. When the order is processed, the other market players are unaware.

Why is Iceberg order important in Crypto?

Crypto whales, a group of people who have a large number of currencies in their wallets, are continually monitoring the markets for an opportunity to act. Such individuals can dramatically upset the market if they acquire or sell a lot of coins.

The pump-and-dump tactic is also known to affect the price of any one cryptocurrency, which then affects the market as a whole.

Iceberg orders cushion such moves. They allow the movement of bulk orders without impacting the larger market. This is an extremely important method, as it will make sure that small retail investors are not hurt, and secondly, it will not cause panic. Iceberg orders also bring stability to volatile markets.