What is Ask Price?

An ask price, or an offer price, is the lowest price that a seller can agree to accept for a certain asset in a bid. It’s an important element of “bid and ask”, a two-way system used for price quoting. It is an element of both the traditional and crypto markets.

The buyer sets the bid price at the maximum amount that they are willing to pay for the asset. During a market order—an immediate trade on the exchange—the most beneficial prices are assigned to the corresponding buy and sell orders. In this case, a buy order is matched with the lowest ask price, while a sell order is matched with the highest bid.

This process can transpire with assets like gold, fiat currencies, or cryptocurrencies. The difference between the ask and bid prices is called the bid-ask spread.

If a person wishes to trade a cryptocurrency, they will see a price indicator on the exchange. For example, a crypto token will have its price listed as $150/$180. This means that the buy price is $180, while the seller would be receiving $150. The remaining spread is used to cover the running costs of the exchange platform.

Market liquidity levels are tied to spreads. These levels indicate how easy it is to sell or purchase a certain asset. Smaller spreads are typical for highly liquid markets, as they contain more participants who are willing to trade. Larger spreads are often indicative of low liquidity, as there are fewer market participants.

Spreads can be flexible. They are affected by other factors, such as changes in transaction costs. The average spread size of an exchange can be used as a marketing strategy, as it can appear more appealing to some traders who then may leave the competitors for said exchange.