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0 sats \ 0 replies \ @dough 12h \ on: Dumping a fork coin doesn't crash its price bitcoin
It depends if its a market order or limit order. Adding limit orders to the book - "i'm willing to sell at X price" - does not necessarily change the price of the coin. It just shows a support or resistance level that the price action can sustain.
Market orders on the other hand, smash through all the available limit orders available in the order book. If you sold 8 of your 10 BTC as a market order, you may receive a lower price for the last BTC relative to the first BTC sold. Thereby "crashing" the price of the coin. Consider the example of an order book for illustration (Price @ 95k). The order book shows willing buyers at different price levels.
3 BTC @ 95k
1 BTC @ 94k
1 BTC @ 93k
1 BTC @ 91k
5 BTC @ 90k
Limit Order Scenario:
Sell Limit: 8 BTC at best bid of 95k:
Trade Executes 3 BTC at $95k because that's all the available. The other 5 BTC you're trying to sell don't execute until someone is willing to buy at $95k. The market price is still 95k so you have not "crashed" the price.
Market Order Scenario:
Market Sell 8 BTC at the market:
You receive (95k3) + (94k1) + (93k1) + (91k1) + (90k * 2) = 743k
You have effectively "crashed" the price down to 90k. There are still willing buyers at 90k (including me).
I realize the price specifics are way outside of reality. But if you changed the order book prices from $1000 incremental changes to $1 changes the point still stands.