Bitcoin rose, bitcoin fell, news says. But do you know how the price of bitcoin is determined? Similarly to the price formation of a commodity, the price of the bitcoin rises or falls according to the selling demand and the buyer demand.
That is, at a given time, if there is pressure from more people wanting to buy the bitcoin, the price will go up. On the other hand, if there is a selling pressure, the price will fall. It is basically the transposition, into the digital environment, of a movement of supply and demand. When the demand for a good is high, the price tends to rise. When the supply is higher than demand, the price tends to fall to balance supply and demand.
There are several factors that can cause the price to rise. For example, institutional adoption, hype, scarcity of supply and loss of confidence in fiat currencies (inflation). This causes more people to look for cryptoassets, causing their price to go up. On the other hand, a regulation that makes it difficult to use cryptoassets or a dump of currencies on the market can make the price falls.
And at where is the price of bitcoin set? It happens on the exchanges, where it is bought and sold. The price of bitcoin is thus the last traded value. And there are no limits on days and times for crypto trading. Which means, there are updated quotes at all times, 24 hours a day, seven days a week.
How the bitcoin price is formed
Here is the bitcoin’s price today:
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However, there is no single price of bitcoin. The price shown on some services, such as Coinmarketcap, is a weighted average price on major market exchanges. Thus, there may be slight price differences between exchanges, which even allows prices to be arbitrated between them. There are services like Coin Trade Monitor that show what these arbitrage opportunities are. In addition to robots that also do this job. In possession of these data, someone can buy cryptocurrencies on one exchange and sell it more expensive in another, making a profit.