Updated 2026-07-25
Spoofing is placing visible orders with no intention of letting them execute, in order to create a false impression of supply or demand and induce others to trade. The orders are cancelled once they have done their work or once price approaches them. In regulated markets it is explicitly illegal, and it is a recognised manipulation pattern in crypto venues too.
For a trader the practical lesson is about which data to trust. Visible order book depth is a statement of intent that can be withdrawn in milliseconds, so a large wall proves very little on its own. Executed trades and completed liquidations are harder to fake, because they involve real capital changing hands. That is one reason liquidation analysis leans on realised events and open interest rather than on resting book size.