Spot markets in crypto refer to markets where crypto assets are traded for immediate delivery and settlement. In a spot market, transactions are made based on the current price (spot price), and the purchase or sale of the asset happens in real-time.

 

Spot Market Characteristics

Real-Time Transactions:

Transactions are executed and settled as soon as the order is placed, based on the current market price.

Immediate Ownership:

Buyers instantly receive the purchased crypto assets into their wallets once the transaction is completed. There are no contractual engagements or delays in asset delivery.

Spot Pricing:

The price used in the transaction is the current price of the asset in the market, determined by supply and demand at that moment.

No Leverage:

Transactions in spot markets are usually done without leverage, which means that buyers and sellers only trade the full amount of the asset they own, without additional borrowing from the broker.

 

Examples of Spot Markets in the Crypto World

Exchanges:

Crypto exchanges such as Indodax offer spot markets where users can buy and sell various types of crypto assets such as Bitcoin, Ethereum, and other altcoins.

Trading Pairs:

Spot markets usually have trading pairs such as BTC/IDR, where users can trade one crypto asset for another or for fiat currency.

 

How Spot Markets Work

Order Book:

Spot markets are regulated through the order book, which records all active buy and sell orders. The order book shows the price requested by the seller (ask) and the price offered by the buyer (bid).

Order Execution:

When a user enters a buy or sell order, the system matches the order with the orders in the order book. For example, if a buyer wants to buy Bitcoin at the current market price, their order will be matched with the lowest available sell order.

Order Types:

Users can use various order types such as market orders (for immediate execution at the current market price), limit orders (for execution at a specific price or better), and stop orders (for executing orders when the price reaches a certain level).

Conclusion

Spot markets in the crypto world provide a platform where digital assets can be traded directly and immediately based on the current market price. It is the most common and simple way to trade crypto, allowing users to own and hold their assets directly. By understanding how the spot market works, investors can make better trading decisions and manage their crypto portfolio more effectively.