Spread
The difference between the highest bid price and the lowest ask price in an order book.
What is Spread?
The spread, or bid-ask spread, measures the gap between the best bid (highest buy price) and best ask (lowest sell price) for a digital asset, serving as an indicator of market liquidity and trading costs. A narrow spread, such as $0.01 on a highly liquid pair like BTC-USD, suggests high liquidity and low costs, while a wider spread of $10 indicates lower liquidity or volatility. Market makers profit from this difference by buying at the bid and selling at the ask.
In practice, the spread appears in the middle of the order book on platforms like Coinbase, highlighting real-time supply-demand imbalances. For illiquid assets, spreads can exceed 10% during low-volume periods, increasing slippage risk for large orders. Traders calculate spread percentage as (ask - bid)/ask * 100 to compare across assets.
Related Terms
BitLicense (New York)
New York Department of Financial Services' licensing requirement for virtual currency businesses, including stablecoin issuers, with enhanced blockchain analytics in 2025.
Solana Account
A digital wallet address on the Solana blockchain used to hold, send, and receive SOL and other SPL tokens, secured by a private key.
Fiat
Government-issued currency not backed by a physical commodity, used as legal tender in digital asset trading.
Hong Kong Stablecoin Bill
Hong Kong Stablecoin Bill, an ordinance passed on May 21, 2025, establishing a licensing regime for issuers of fiat-referenced stablecoins in Hong Kong, which became the Stablecoins Ordinance effective August 1, 2025.
Ask Side
The section of an order book listing all open sell orders, sorted from lowest to highest price.
Implied Volatility
Market's expected annualized price fluctuation of an asset, derived from option prices.