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
Initial Margin
The upfront collateral required to open a leveraged position.
Asks (sell orders)
Orders from sellers indicating the price and quantity at which they are willing to sell a digital asset.
BitLicense (New York)
New York Department of Financial Services' licensing requirement for virtual currency businesses, including stablecoin issuers, with enhanced blockchain analytics in 2025.
Double Spend
Attempting to spend the same digital asset more than once in a blockchain network.
Capital Inefficiency
The underutilization of provided liquidity in DeFi protocols, where most capital remains idle across unused price ranges.
EigenCloud
Restaking protocol on Ethereum enabling staked ETH to secure additional services (Actively Verifiable Services, AVSs), now rebranded as a verifiable cloud for AI and compute.