Bid-Ask Spread
The bid-ask spread is the gap between the highest price buyers currently offer (the bid) and the lowest price sellers currently accept (the ask). It is the cost of trading immediately: crossing the spread with a market order pays it in full. Tight spreads mark liquid, competitive markets; wide spreads mark thin or nervous ones.
How does spread affect your real cost?
Buy at the ask, and the fair midpoint is already half a spread below your fill; a full round trip with market orders pays the whole spread on top of exchange fees. On a major pair where the spread is a basis point or two this is almost invisible; on a thin altcoin pair the spread alone can be several times the trading fee. For short-horizon strategies this is decisive: a scalp targeting a few tenths of a percent must clear spread plus fees plus slippage before any profit exists, which is why the same signal can be viable on a liquid market and worthless on an illiquid one.
Why does the spread widen?
The spread is set by competition among liquidity providers, and it widens when providing liquidity gets riskier or less rewarding. During volatile moments — a news shock, a sudden pump or dump — market makers pull quotes back or thin them out because a resting order is likely to be picked off by better-informed flow. Quiet hours, small-cap pairs, and fragmented listings also carry structurally wider spreads because fewer participants compete to quote. A sudden widening on an otherwise liquid pair is itself information: someone stopped being willing to stand near the current price.
What is a good spread in crypto?
There is no single threshold — the honest benchmark is relative. Major pairs on large exchanges typically trade with spreads measured in single basis points, mid-caps in the tens, and small illiquid pairs can reach a percent or more. Two practical rules follow. Compare a pair's current spread with its own normal level: a spread far above its usual range signals stress or vanished liquidity. And compare the spread with your target profit: if the round-trip spread is a large fraction of the move you hope to capture, the trade's arithmetic is broken before it starts.
Educational content — not financial advice. Trading digital assets carries substantial risk of loss. See the full Risk Disclosure.
Volume Catcher is an analytical tool, not financial advice. Trading digital assets involves substantial risk of loss. Past performance of signals does not guarantee future results. You are solely responsible for your execution decisions and for complying with the laws of your jurisdiction.