What Is an Iceberg Order and Why Does It Matter in the Crypto Market?

The crypto market has witnessed several defining moments since its arrival, and despite all the lows that have engulfed the crypto world, it has always come back even stronger. And it’s not a secret that every crypto-enthusiast has experienced «the dip» at one point, when things go south in the crypto market, and they still weather the storm of the volatile market. Notably, Terra Luna has completely collapsed, while the majority of altcoins and popular crypto-assets like Bitcoin and Ethereum are trading at their lowest prices in recent periods. While these manipulative approaches to influencing the crypto market are not sustainable, to say the least, it is important to establish proactive measures to curb what may turn out to be the downfall of the emerging crypto market.

In this article, we’ll break down what an iceberg order means in simple terms, how it can function as a financial instrument that is capable of solving the aforementioned problems, and how best they can positively affect the crypto market.

Introduction to Iceberg Order

You would agree that such an order is capable of disrupting the market trend, not to mention invoking panic among traders. We are also quite familiar with the concept of «pump and dump» in the crypto world, where a big player tries to influence the price of cryptocurrency for his gain by dealing with a large-volume order.

What Is an Iceberg Order and Why Is It Important?

This particular trading tool was adopted in the traditional financial market, which is where it was previously implemented before finding its way into the crypto world. The adoption of an iceberg order trading model for the crypto market was born out of the need to foster a healthier and more advanced market to rival the stable and trusted traditional financial market.

Crypto whales, comprising of large firms or affluent individuals, mostly use the iceberg order when they carry out big crypto transactions to prevent potential disruption. Although optional, the trading instrument enables large-scale buyers, mostly institutional investors to carry out large crypto transactions without upsetting the market.

How Do Iceberg Orders Work?

In crypto terms, an iceberg order implies that a big trading order will be divided into smaller limit orders to conceal the transaction size and avoid disruptions in the price level of a crypto asset. This situation is quite synonymous with the popular saying «Tip of the iceberg,» which suggests that a small part of something is seen or heard about, whereas there is a much larger part that is not seen or heard about. In that light, the iceberg order and many other tools now used in the crypto world are all an attempt to build the crypto world into a more stable market.

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