Price impact refers to the change in the market price of a cryptocurrency resulting from a trade. When a large buy or sell order is executed, it can affect the price because the available liquidity may not be sufficient to absorb the transaction without causing a notable price shift.For example, if a large volume of a coin is bought, the increased demand can lead to a higher price as sellers adjust their asks to match the market conditions. Conversely, if a significant amount of a coin is sold, the excess supply can drive the price down.Exchanges usually show price impact as a percentage, indicating how much the price changes due to a trade relative to the coin’s market price before the transaction. Understanding price impact is crucial for traders, as it helps them gauge the effectiveness of their trades and potential costs involved, especially when executing larger orders.