Bid-Ask Spread
The difference between the highest bid price and the lowest ask price in an order book, indicating market liquidity.
What is Bid-Ask Spread?
The bid-ask spread measures trading costs; a tight spread like 0.01% on BTC/USDT signals high liquidity, while wider spreads (e.g., 1%) occur in illiquid assets. Market makers profit from it, as in capturing $0.50 on a $2,000 ETH trade.
In crypto, spreads average 0.1-0.5% on major pairs, but can spike during volatility, leading to slippage.
Effective spreads, per research, gauge true costs beyond quoted, aiding institutional trading on platforms like Kaiko.
Related Terms
BTC Credit Hurdle (MSTR)
The BTC ARR% needed to achieve investment-grade BTC Credit under Strategy's framework.
Mainnet
The primary, public blockchain network where real-world transactions and digital assets are processed.
Price Oracle
A mechanism providing real-time price data for digital assets in DeFi protocols.
Optimistic Rollup
An Optimistic Rollup is a layer-2 scaling solution for Ethereum that processes transactions off-chain, assumes they are valid, and posts compressed data to the main chain, relying on fraud proofs to ensure correctness.
Price Impact (DEX)
The change in a liquidity pool’s token price caused by a trade, expressed as a percentage deviation from the initial quote.
Primary Dealers
Designated financial institutions authorized to trade directly with the Federal Reserve Bank of New York in government securities, numbering 24 as of 2025.