Bid Price

When closing a deal, there are two sides of exchange in the trading market. Bid price is the buyers’ side which they offer a price for the commodity (asset, stock, cryptocurrency) they want. This price is the highest amount the buyer is willing to give a specific cryptocurrency in the market. These bid prices are listed in the trading order book, and in an ideal scenario, the sellers choose the highest bidder.

Bid Price and Ask Price: The Relationship

The other side of the deal is the ”ask price”. The ”ask price” is the seller’s side of the trading order book. At this price, sellers decide on the price of the selling commodity. Sellers can determine the ask price whatever they want. However, it needs to be reasonable with the current market if the seller actually wants to sell.

Like every transaction, both sides want to earn as much as possible. Therefore, buyers choose the lowest ask price when it comes to the buyers; in contrast, sellers choose the highest bid price. In addition, the highest bid price is usually lower than the lowest ask price. Apart from this, the buyer can also offer for commodity even though the seller is not selling the product. This kind of bid is defined as an unsolicited bid. The seller can react to this price and counteroffer the ”ask price”. The difference between these prices is referred to as the bid-ask spread.

Bidding War with Bid Prices

When the demand for a cryptocurrency increases, it attracts more investors. Therefore, the bidding price of that particular cryptocurrency increases because of the daily trading volume increase. When investors start to bid after another to obtain the entity, it creates a bidding war. In a bidding war, buyers increase their bid prices repeatedly to beat their competitors. This series of events cause the price increase for the particular item.