Crypto glossary
Iceberg order
An iceberg order is a large order split into small visible portions, with the rest hidden, so other traders cannot see its full size on the order book.
The trader sets a total size and a display size. Only the display portion appears in the order book; when it fills, the exchange automatically places the next slice at the same price until the whole order is done. To an observer, it looks like a modest order that keeps refilling. Several large crypto exchanges support iceberg orders natively, and algorithms achieve the same effect elsewhere.
Large traders use icebergs to avoid moving the market against themselves. Showing a 1,000 BTC bid would attract front-runners and cause sellers to raise prices; showing 10 BTC at a time does not. They are a common tool for funds, miners selling production and market makers.
Icebergs reduce market impact but do not eliminate it. Experienced traders and order flow tools can detect them by watching a level absorb far more volume than was displayed, and some traders treat a detected iceberg as a sign of a large player defending a price. Hidden orders also mean visible depth understates real liquidity.
Example
A fund needs to sell 500 ETH without spooking the market. It places an iceberg at 3,100 dollars showing only 5 ETH, and the level absorbs sell orders for hours as each slice refills.