Buy walls and sell walls - you're doing it wrong

This is only going to be a short post, but one thing I've seen a lot in the crypto space is the use of buy walls and sell walls as a measure of reading price action.

The general consensus is that a buy wall at a level means that there are lots of orders there ready to push price up, and vice versa with sell walls to push the price down.

Let's take a look.

What does this suggest to you? That there's a lot of buying power and the sell wall is only thin, so price should be able to rip through the next level of resistance as a result?

Okay, now let's look at the chart.

What do you notice about those areas on the chart where I've circled?

They are big moves up with no support. Looking at the order book, there are a lot of buy orders here. But that doesn't make sense?

In reality, the opposite of what people think about buy walls and sell walls is true.

One major thing to note is that buy walls and sell walls are psychological. Look at the amount of people that believe that they are by definition what I mentioned above. Have you ever watched price approach a level only to then see the order book completely change? Huge orders suddenly disappear?

That's manipulation, and people are manipulating traders into approaching that level with confidence that someone else is buying or selling a big position, so that you can do the same and profit.

Incorrect.

This brings me onto the real purpose of buy walls and sell walls: LIQUIDITY.

Buy limits and sell limits don't move price; market orders do that.

If there are lots of buy orders as in the example above, coupled with a chart like above where there's been a big move with no real support, that means that there are plenty of bids to be eaten up and for price to tank. Or vice versa.

General rule of thumb: if you can see something and it's blindingly obvious, SO CAN EVERYBODY ELSE.

To recap:

Orders can be pulled at the last second (manipulation and tricking you)
When somebody, particularly "whales" want in, these walls provide LIQUIDITY to fill their big orders
Only people entering at market move price