What Are the Primary Risks Associated with Using Iceberg Orders in Volatile Cryptocurrency Markets?

In volatile crypto markets, iceberg orders risk partial execution, leaving a large portion of the order unfilled if prices move rapidly. The sequential nature of the order means it takes longer to execute, increasing exposure to "slippage," where the final price is worse than expected.

Sophisticated algorithms can also detect the pattern of refreshing small orders, revealing the hidden volume to predatory traders. This can lead to front-running, where others trade against the iceberg order, pushing the price in an unfavorable direction before the full order can be filled.