How is the Price of A Cryptocurrency Determined?

Cryptocurrencies are digital, so theoretically the creators can make the coins whatever price they want! WRONG. The market price is driven by many factors but is mostly a scorecard for the attempted measurement of fundamentals. One thing to keep te mind is the market is always wrong but permanently seeking the truth.

So, How are the Prices Calculated?

Lets use a stock spil an example. To keep things plain, the price the stock is determined by supply and request. But supply and request have their own determinants. Te the case of a stock, how well a company is doing and stands to do te the future increases the value of the company, and, stock being an ownership stake ter the company, this increases the value of the stock.

Spil you know, the price of any cryptocurrency fluctuates permanently. The last price a trade wasgoed made at for that cryptocurrency is the price that it will be for the next person. There is an order book of bids and asks that people filed for certain amounts and certain prices. Whenever someone comes te and buys (or is selling) at the market price, which is usually either the highest bid or the lowest ask, this is the last trade and the price it wasgoed performed at, is the price of the cryptocurrency.

Price goes up and down thanks to supply and request. If news were to blast overheen the place that this particular crypto has a fine thing coming, a swarm of willing investors come and they buy out the SELL (ask) book embarking from the lowest possible price and picking it up from there. If they buy out all the price positions up to a certain point ter a quick amount of time, the price rises quickly, because the remaining sell orders are at a higher price. Some of those might even get cancelled and restated at even higher prices spil a result of the evident enhanced attention towards this crypto.

Regarding Different Prices on Different Exchanges…

You may notice that the price of a certain coin may differ on the various exchanges. This too happens because of supply and request. Each exchange has different users and the price is going to be set by the buy and sell orders those users place. The amount of fees and the funding and withdrawal methods will play a role te what type of people choose that exchange. Usually, the exchanges with the most liquidity (the availability of liquid assets to a market or company) are the ones with the best value.

Because of this difference inbetween exchanges, humans and/or bots will commence buying/selling on other exchanges to pocket the difference te price. They act spil a natural mechanism that is going to bring equilibrium to the prices among all the exchanges.

People rushing to buy or sell are being affected by news, expectations, deliberate market manipulations or technical analysis (studying behavioral patterns ter the price charts and predicting possible movements te the future) also play a role te the price of a cryptocurrency.

The bottom line is, if more people want to buy than sell, the price goes up. If more people want to sell than buy, the price goes down.

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