Bid-ask spread: the cost of immediate execution

The Invisible Trading Fee

The bid-ask spread is the difference between the highest price a buyer is willing to pay (the bid) and the lowest price a seller is willing to accept (the ask) at any given moment. If Bitcoin's best bid is $59,998 and its best ask is $60,002, the spread is $4. To buy and immediately sell would cost you that gap, regardless of any explicit exchange fee.

Spreads are a direct readout of liquidity. Tight spreads—just a few cents on Bitcoin—indicate deep, competitive markets where many market makers compete to fill orders. Wide spreads, common on smaller altcoins, mean fewer participants and higher implicit costs. The spread typically widens during high-volatility periods because market makers compensate for the increased risk of holding inventory.

As a trader, you can pay the spread or earn it. Placing a market order means you pay the spread—you buy at the ask or sell at the bid. Placing a limit order at the inside means you sit on the book and, if filled, earn the spread by being the one who provided immediate execution to someone else. Professional market makers build entire businesses around capturing this gap thousands of times per day.