What is Slippage in Crypto
What is slippage in crypto trading?
Slippage in crypto trading is the difference between the expected price of your trade and the actual execution price once it hits the market. It’s not a bug in the exchange. It’s the cost of trying to trade in a live, moving order book or AMM pool.
On centralized exchanges, slippage mainly comes from how your order walks the book. A market buy eats through the cheapest sell orders first, then climbs higher if your size is bigger than the liquidity near the top. If you send a 3 BTC market buy into a pair where only 0.5 BTC sits at the best ask, the rest of your order will execute at worse prices deeper in the book.
In fast markets, that effect stacks with price moves between the time you click “buy” and the time the trade completes. For large orders, slippage becomes a key part of your trading cost, right next to fees and funding.
On DEXs and AMMs, the same problem shows up with different math. What is crypto slippage? You are not walking an order book; you are pushing the pool along a pricing curve. The larger your swap relative to pool size, the more you bend that curve and the worse the rate you get. Interfaces show this as “price impact,” but for you as the trader, it’s still slippage: the execution price ends up worse than the spot price you saw on your tracker. That’s why most DeFi UIs ask you to set a “slippage tolerance.” If the trade would execute outside that band, the transaction reverts instead of filling at a terrible rate.
Why slippage happens: common causes
Slippage happens because your order meets a market that’s already moving. Crypto prices shift every second, and order books update even faster. When you send an order, you’re locking in intent, not execution. The gap between the two points is where slippage lives.
Low liquidity is the classic cause. If the pair you trade has a shallow book, even small orders can chew through multiple price levels. A 1 BTC market buy on a pair with tiny volume can move the quote by several percent – pure slippage from walking the book. This gets worse during off-hours, after large liquidations, or when the spread widens because market makers step away. New traders often blame the exchange, but the book itself creates the bad fill. When liquidity disappears, slippage fills the vacuum – while this article on spot trading platforms keeps crypto enthusiasts armed and informed.
Fast price movement is another trigger. News hits, volatility spikes, and your order gets filled at whatever price is available when it reaches the book. Even a five-second delay can shift the execution price if bots are sweeping levels ahead of you. This is why slippage in crypto is common around CPI prints, ETF flow reports, liquidation cascades, and unexpected project announcements. The faster the tape moves, the more the “expected” price becomes fiction by the time your order executes.
And then there’s timing. High network load slows confirmations on some chains. If the blockchain is congested, the market keeps moving while your transaction sits in the mempool. By the time it executes, the price may be far from where you started.
Types of slippage: positive vs. negative
Slippage is not always bad. There are two clear types: positive slippage, when you get a better price than quoted, and negative slippage, when you get a worse one. On most crypto exchanges, both slippage crypto types can happen on market and marketable limit orders, depending on how the order book looks the moment your trade hits matching. Some platforms even call positive slippage “price improvement,” because you save a few ticks versus the screen quote.
Negative slippage is what most traders feel first. You send a market buy for ETH at $3,100, but the actual fill comes back at $3,110. The extra $10 per coin is slippage caused by thin liquidity, fast price moves, or both. On a 5 ETH order, that’s $50 lost before fees. In small-cap tokens, the same effect can be brutal.
Positive slippage is the mirror image. Say you place a market sell on BTC with a quote at $70,000, but a resting bid at $70,050 appears just before your order executes. The trade fills higher, so you receive more than expected. Some CEXs and brokers pass that improvement back to the trader; others may keep part of it under their routing rules.
