Order book depth represents the quantity of buy and sell orders at various price levels. When depth is shallow, even modest market orders can consume available liquidity and push prices up or down significantly.

For example, if only $50,000 of bids exist within 2% of spot price, a $75,000 sell order can cascade through multiple levels, creating a rapid price decline. Shallow books amplify volatility and increase perceived instability. Deep liquidity buffers against these swings