Iceberg Order

An Iceberg Order, in crypto trading, is a large order that has been divided into smaller, undisclosed quantities to avoid revealing the full extent of the trader's position. This method is employed to minimize the impact of the order on the market price.

Example:

A trader wants to purchase 1,000 bitcoins but does not want to cause a sudden increase in the market price. Instead of placing a single order for 1,000 bitcoins, the trader divides it into smaller orders of, say, 100 bitcoins each. These smaller orders are placed at different price levels or over a period of time, concealing the total size of the original order.

Case:

Consider a scenario where a large investor wants to sell a significant amount of Ethereum. If they were to place a single order for the entire amount, it could cause the price of Ethereum to drop significantly due to the sudden increase in supply. To avoid this, the investor uses an Iceberg Order strategy by breaking down the sell order into smaller, undisclosed quantities. This helps prevent a sudden price drop and allows the investor to execute the trade more discreetly.