The bid-ask spread in cryptocurrency refers to the difference between the highest price that a buyer is willing to pay for a certain digital currency (bid price) and the lowest price that a seller is willing to sell it for (ask price). This spread is essentially the cost of trading a particular cryptocurrency.
For example, if a buyer is willing to pay $10,000 for one bitcoin, and a seller is only willing to sell it for $10,100, the bid-ask spread would be $100. This gap represents the profit that market makers or exchanges can make on each trade.
A tight bid-ask spread indicates a liquid market with a high volume of trading activity, while a wide spread suggests lower liquidity and potentially higher transaction costs. Traders often monitor the bid-ask spread closely to assess market conditions and make informed decisions about buying or selling cryptocurrencies.
