its price determined by its demand and supply.
just like gold...yes we can say bitcoin is like a gold we can take it same in everycase.
when we need bitcoin its price will increase and if no one need bitcoin seller will automatic make down its price.
and keeping bitcoin and gold is also same process its price may increase in many way in future.
Topic: How is BTC Price determined ?? (Read 1017 times)
it would be easy to say supply and demand, but the reality is, that for a small market like this and for any other alt, manipulation is the real answer
there is massive manipulation going one that determines the real price you see in the end
there is massive manipulation going one that determines the real price you see in the end
The price is agreed to by those that are exchanging, just like haggling over a price for produce or products in a market would happen. Some people have dollars (or other local currencies) and want bitcoins. Other people have bitcoins and want local currency. When they find each other, they either come to an agreement on how much they will exchange, or they fail to come to an agreement and they look for someone else to exchange with. Here's an example I wrote up previously (when the exchange rate was much lower than it is today):
The "price" of a bitcoin is exactly what someone somewhere is willing to pay for it, and someone else is willing to sell it for.
Exchanges provide a place for people who want to buy bitcoins and people who want to sell bitcoins to find each other.
Example:
Albert has 100 BTC. He needs to pay his electric bill and the electric company doesn't accept bitcoin as payment. He decides to convert some of his bitcoin to USD. Albert logs on to an exchange and creates a limit order offering to sell 10 of his bitcoin for $33.45 each. He is not willing to sell the bitcoin for less than $33.45 because at any price less than that he'd rather just hold on to the bitcoin and pay his electric bill with other funds.
Bobby only has a two bitcoin that he purchased at $32.50 each. He decides that he doesn't really want bitcoin anymore, but he doesn't want to take loss. He logs on to the exchange and creates a limit order offering to sell his two bitcoin for $32.55 each.
Carl has just received his paycheck. After paying his expenses he has $200 left over. He decides to purchase bitcoin with this money. He feels like the exchange rate might drop a bit and so to get them as cheap as possible, he transfers his money to the exchange and creates a limit order to purchase 6.25 BTC at $32 each.
David just received an inheritance of $10,000. He decides he'd like to hold the entire balance as bitcoin. He has seen the exchange rate varying between $31.50 and $33.50 lately, and hopes he can get the entire balance at $31.50. He creates a limit order at the exchange for 317.460317 BTC at $31.50 each.
Earl is in a hurry. He just wants to buy something from Overstock.com right now, and he'll take whatever the current exchange rate is. He needs $60 worth of bitcoin. He transfers his $60 to the exchange and places a market order for $60 worth of bitcoin. The exchange sees that the cheapest offer to sell bitcoin at their site at the moment is Bobby's offer of 2 bitcoin at $32.55 each. The exchange transfers the $60 from Earl to Bobby and at the same time transfers 1.84331797 bitcoin from Bobby to Earl.
At this hypothetical moment the current bitcoin price is therefore $32.55, since that is the most recent exchange that has occurred.
Earl now has 1.84331797 BTC
Bobby now has $60 and 0.15668203 BTC still available for someone to purchase from him at an exchange rate of $32.55 per bitcoin.
Now Albert suddenly realizes that he doesn't have enough other funds for his bill. He needs $334.50 right away to pay the bill, and needs to sell the bitcoin quickly to get the necessary money. Albert cancels his limit order and places a market order to sell $334.50 worth of bitcoin. The exchange sees that the most expensive offer to buy bitcoin at their site at the moment is Carl's offer of 6.25 bitcoin at $32 each. The exchange transfers $200 from Carl to Albert, and 6.25 bitcoin from Albert to Carl. Since Albert still needs another $134.50 worth of bitcoin to fulfill his order, the exchange sees that the next highest offer is David's offer of 317.460317 BTC at $31.50 each. The exchange transfers 4.26984127 BTC from Albert to David, and $134.50 from David to Albert.
At this hypothetical moment the current bitcoin price is therefore $31.50, since that is the most recent exchange that has occurred.
Albert now has the $334.50 that he needs, and still has 89.4801587 BTC remaining.
Carl has picked up the 6.25 bitcoin that he wanted, spending the $200 that he wanted to spend.
David has purchased 4.26984127 for $134.50, and still has a limit order out there waiting to be filled for another 313.190467 bitcoin at $31.50 each.
You'll notice that there are actually many "prices" for bitcoin. There is the price that each individual is willing to buy or sell their bitcoin for. Some of the more often quoted prices are the "current Ask", "current Bid" and "most recent exchange".
Prior to Earl coming along, the "Current Ask" was Bobby's $32.55 that he is asking to sell his bitcoin (the lowest price anyone is willing to sell for at that time).
The "Current Bid" was Carl's $32 bid to purchase bitcoin from anyone willing to sell that cheap (the highest anyone is willing to pay to buy at that time).
Exchanges provide a place for people who want to buy bitcoins and people who want to sell bitcoins to find each other.
Example:
Albert has 100 BTC. He needs to pay his electric bill and the electric company doesn't accept bitcoin as payment. He decides to convert some of his bitcoin to USD. Albert logs on to an exchange and creates a limit order offering to sell 10 of his bitcoin for $33.45 each. He is not willing to sell the bitcoin for less than $33.45 because at any price less than that he'd rather just hold on to the bitcoin and pay his electric bill with other funds.
Bobby only has a two bitcoin that he purchased at $32.50 each. He decides that he doesn't really want bitcoin anymore, but he doesn't want to take loss. He logs on to the exchange and creates a limit order offering to sell his two bitcoin for $32.55 each.
Carl has just received his paycheck. After paying his expenses he has $200 left over. He decides to purchase bitcoin with this money. He feels like the exchange rate might drop a bit and so to get them as cheap as possible, he transfers his money to the exchange and creates a limit order to purchase 6.25 BTC at $32 each.
David just received an inheritance of $10,000. He decides he'd like to hold the entire balance as bitcoin. He has seen the exchange rate varying between $31.50 and $33.50 lately, and hopes he can get the entire balance at $31.50. He creates a limit order at the exchange for 317.460317 BTC at $31.50 each.
Earl is in a hurry. He just wants to buy something from Overstock.com right now, and he'll take whatever the current exchange rate is. He needs $60 worth of bitcoin. He transfers his $60 to the exchange and places a market order for $60 worth of bitcoin. The exchange sees that the cheapest offer to sell bitcoin at their site at the moment is Bobby's offer of 2 bitcoin at $32.55 each. The exchange transfers the $60 from Earl to Bobby and at the same time transfers 1.84331797 bitcoin from Bobby to Earl.
At this hypothetical moment the current bitcoin price is therefore $32.55, since that is the most recent exchange that has occurred.
Earl now has 1.84331797 BTC
Bobby now has $60 and 0.15668203 BTC still available for someone to purchase from him at an exchange rate of $32.55 per bitcoin.
Now Albert suddenly realizes that he doesn't have enough other funds for his bill. He needs $334.50 right away to pay the bill, and needs to sell the bitcoin quickly to get the necessary money. Albert cancels his limit order and places a market order to sell $334.50 worth of bitcoin. The exchange sees that the most expensive offer to buy bitcoin at their site at the moment is Carl's offer of 6.25 bitcoin at $32 each. The exchange transfers $200 from Carl to Albert, and 6.25 bitcoin from Albert to Carl. Since Albert still needs another $134.50 worth of bitcoin to fulfill his order, the exchange sees that the next highest offer is David's offer of 317.460317 BTC at $31.50 each. The exchange transfers 4.26984127 BTC from Albert to David, and $134.50 from David to Albert.
At this hypothetical moment the current bitcoin price is therefore $31.50, since that is the most recent exchange that has occurred.
Albert now has the $334.50 that he needs, and still has 89.4801587 BTC remaining.
Carl has picked up the 6.25 bitcoin that he wanted, spending the $200 that he wanted to spend.
David has purchased 4.26984127 for $134.50, and still has a limit order out there waiting to be filled for another 313.190467 bitcoin at $31.50 each.
You'll notice that there are actually many "prices" for bitcoin. There is the price that each individual is willing to buy or sell their bitcoin for. Some of the more often quoted prices are the "current Ask", "current Bid" and "most recent exchange".
Prior to Earl coming along, the "Current Ask" was Bobby's $32.55 that he is asking to sell his bitcoin (the lowest price anyone is willing to sell for at that time).
The "Current Bid" was Carl's $32 bid to purchase bitcoin from anyone willing to sell that cheap (the highest anyone is willing to pay to buy at that time).
Hats off to you sir, so clearly with example you have gave the reply for the OP question that anyone newbie will also come to know about the trading and market price procedure.
Now i think OP query would have been cleared on how the market price is determined. apart from this who ever read your comment will also have gained knowledge about how market price determined.
It's depend the trend and issue of bitcoin price. And also depend on demand and supply. Someone who are "big" player can also change the bitcoin price by buying or selling their bitcoin.
The price is calculated based on the demand in the market and the people selling it
The answer to that question is really complex but basically boils down to not just supply and demand but the amount of bitcoin moving around stimulates the market as well. Also altcoin trading affects bitcoin price as well.
The free market determines the prices of individual goods. This concept can be applied to bitcoins. What people are willing to pay for bitcoins is what they are valued at. We could further explain this but this the basic summary of it is the market demand curve is determined by the sum of individual demand curves. An example would be the market demand of laundry detergent is dependent on the demand of individuals for laundry detergent. So similarly, the market demand curve of bitcoin is determined by the demand of demand curves of individuals who are willing to pay a certain price at a certain time.
It's based on demand as people have said, but the increased demand is caused by more people knowing about bitcoin and using or investing in it. Also, since there is a limit to how many are being produced, that keeps the supply down.
Similar to the stock market, the price ranges in response to supply and demand
I'd recommend using a tool like http://www.preev.com if you need an averaged price for bitcoin across multiple exchanges. That's how the price of bitcoin is calculated really - but there are deeper issues like electricity cost, computing limits, reliability, usage, demand and lots of other elements contribute.
Just like how other things price are determined, it depends o the supply and demand. More demand for people, less coins available then higher price. It's a trade afterall. Although in some case the price are being manipulated by some whales o the market so it affects the price.
Indeed, its base on the Law of supply and demand. As more people wants bitcoin, the supply become scare and it command a higher price. The buyer/investor/traders action like speculation,hoarding also manipulates or affects the price.
Just like how other things price are determined, it depends o the supply and demand. More demand for people, less coins available then higher price. It's a trade afterall. Although in some case the price are being manipulated by some whales o the market so it affects the price.
This one is true, aside from the supply and demand thing, there's a whale who's playing with it so we really can't determine how it works but in short term that is needed btc is just like any currency that we use. btc uses for trading and that trading platform will gives you idea how bitcoin price worth.
Just like how other things price are determined, it depends o the supply and demand. More demand for people, less coins available then higher price. It's a trade afterall. Although in some case the price are being manipulated by some whales o the market so it affects the price.
Supply and demand.
It trades on the free market, if more people want to buy prices goes up, if more people is selling price goes down.
I think Supply and demand is perhaps one of the most fundamental concepts of economics and trade so there is no difference between how bitcoin price determined and stocks price determined right? Basic concept 1. Price up when people need and buying 2. Price up when people selling it.It trades on the free market, if more people want to buy prices goes up, if more people is selling price goes down.
Well, stocks pay dividends, we don't have that in bitcoin or precious metals.
Also check: http://www.investopedia.com/terms/p/price-earningsratio.asp
Supply and demand.
It trades on the free market, if more people want to buy prices goes up, if more people is selling price goes down.
I think Supply and demand is perhaps one of the most fundamental concepts of economics and trade so there is no difference between how bitcoin price determined and stocks price determined right? Basic concept 1. Price up when people need and buying 2. Price up when people selling it. It trades on the free market, if more people want to buy prices goes up, if more people is selling price goes down.
You can read in here: https://bitcoin.org/en/faq#what-determines-bitcoins-price
"The price of a bitcoin is determined by supply and demand"
"The price of a bitcoin is determined by supply and demand"
Just like how the stock price is determined, the price is only what the next person will buy it for. If someone values it more, and others do too, then the price will go up.
As with any freely traded market, there are times when the really big players have agreed amongst themselves to stabilize price within a narrow range and to spend money placing trades and spreading news whenever there is movement out of their expected range. There was a period in early 2013 in which the $ printing institutions allegedly worked quite hard to spread any bad news which might depress the bitcoin price hence proving it to be a worthless computer science experiment. The other thing which they can do is embargo a couple of months of good news in order to hold the price down. Guess what happens in the end ?
Contrary to capitalist free market theory, what you get in a speculation dominated free market is a price dependent mainly on the sentiment of news in circulation at the traders; nearly nothing to do with production costs and product usefulness. Try looking up "penny stock tips" or "tulips".
If you can get your boss to pay you a part of your salary in bitcoin, and bill some of his customers in bitcoin, you are doing us all a favour by moving BTC on from being a speculator curiosity, comparable to krugerrand collecting, to being related in price to its intrinsic worth.
Contrary to capitalist free market theory, what you get in a speculation dominated free market is a price dependent mainly on the sentiment of news in circulation at the traders; nearly nothing to do with production costs and product usefulness. Try looking up "penny stock tips" or "tulips".
If you can get your boss to pay you a part of your salary in bitcoin, and bill some of his customers in bitcoin, you are doing us all a favour by moving BTC on from being a speculator curiosity, comparable to krugerrand collecting, to being related in price to its intrinsic worth.
The price is agreed to by those that are exchanging, just like haggling over a price for produce or products in a market would happen. Some people have dollars (or other local currencies) and want bitcoins. Other people have bitcoins and want local currency. When they find each other, they either come to an agreement on how much they will exchange, or they fail to come to an agreement and they look for someone else to exchange with. Here's an example I wrote up previously (when the exchange rate was much lower than it is today):
The "price" of a bitcoin is exactly what someone somewhere is willing to pay for it, and someone else is willing to sell it for.
Exchanges provide a place for people who want to buy bitcoins and people who want to sell bitcoins to find each other.
Example:
Albert has 100 BTC. He needs to pay his electric bill and the electric company doesn't accept bitcoin as payment. He decides to convert some of his bitcoin to USD. Albert logs on to an exchange and creates a limit order offering to sell 10 of his bitcoin for $33.45 each. He is not willing to sell the bitcoin for less than $33.45 because at any price less than that he'd rather just hold on to the bitcoin and pay his electric bill with other funds.
Bobby only has a two bitcoin that he purchased at $32.50 each. He decides that he doesn't really want bitcoin anymore, but he doesn't want to take loss. He logs on to the exchange and creates a limit order offering to sell his two bitcoin for $32.55 each.
Carl has just received his paycheck. After paying his expenses he has $200 left over. He decides to purchase bitcoin with this money. He feels like the exchange rate might drop a bit and so to get them as cheap as possible, he transfers his money to the exchange and creates a limit order to purchase 6.25 BTC at $32 each.
David just received an inheritance of $10,000. He decides he'd like to hold the entire balance as bitcoin. He has seen the exchange rate varying between $31.50 and $33.50 lately, and hopes he can get the entire balance at $31.50. He creates a limit order at the exchange for 317.460317 BTC at $31.50 each.
Earl is in a hurry. He just wants to buy something from Overstock.com right now, and he'll take whatever the current exchange rate is. He needs $60 worth of bitcoin. He transfers his $60 to the exchange and places a market order for $60 worth of bitcoin. The exchange sees that the cheapest offer to sell bitcoin at their site at the moment is Bobby's offer of 2 bitcoin at $32.55 each. The exchange transfers the $60 from Earl to Bobby and at the same time transfers 1.84331797 bitcoin from Bobby to Earl.
At this hypothetical moment the current bitcoin price is therefore $32.55, since that is the most recent exchange that has occurred.
Earl now has 1.84331797 BTC
Bobby now has $60 and 0.15668203 BTC still available for someone to purchase from him at an exchange rate of $32.55 per bitcoin.
Now Albert suddenly realizes that he doesn't have enough other funds for his bill. He needs $334.50 right away to pay the bill, and needs to sell the bitcoin quickly to get the necessary money. Albert cancels his limit order and places a market order to sell $334.50 worth of bitcoin. The exchange sees that the most expensive offer to buy bitcoin at their site at the moment is Carl's offer of 6.25 bitcoin at $32 each. The exchange transfers $200 from Carl to Albert, and 6.25 bitcoin from Albert to Carl. Since Albert still needs another $134.50 worth of bitcoin to fulfill his order, the exchange sees that the next highest offer is David's offer of 317.460317 BTC at $31.50 each. The exchange transfers 4.26984127 BTC from Albert to David, and $134.50 from David to Albert.
At this hypothetical moment the current bitcoin price is therefore $31.50, since that is the most recent exchange that has occurred.
Albert now has the $334.50 that he needs, and still has 89.4801587 BTC remaining.
Carl has picked up the 6.25 bitcoin that he wanted, spending the $200 that he wanted to spend.
David has purchased 4.26984127 for $134.50, and still has a limit order out there waiting to be filled for another 313.190467 bitcoin at $31.50 each.
You'll notice that there are actually many "prices" for bitcoin. There is the price that each individual is willing to buy or sell their bitcoin for. Some of the more often quoted prices are the "current Ask", "current Bid" and "most recent exchange".
Prior to Earl coming along, the "Current Ask" was Bobby's $32.55 that he is asking to sell his bitcoin (the lowest price anyone is willing to sell for at that time).
The "Current Bid" was Carl's $32 bid to purchase bitcoin from anyone willing to sell that cheap (the highest anyone is willing to pay to buy at that time).
Exchanges provide a place for people who want to buy bitcoins and people who want to sell bitcoins to find each other.
Example:
Albert has 100 BTC. He needs to pay his electric bill and the electric company doesn't accept bitcoin as payment. He decides to convert some of his bitcoin to USD. Albert logs on to an exchange and creates a limit order offering to sell 10 of his bitcoin for $33.45 each. He is not willing to sell the bitcoin for less than $33.45 because at any price less than that he'd rather just hold on to the bitcoin and pay his electric bill with other funds.
Bobby only has a two bitcoin that he purchased at $32.50 each. He decides that he doesn't really want bitcoin anymore, but he doesn't want to take loss. He logs on to the exchange and creates a limit order offering to sell his two bitcoin for $32.55 each.
Carl has just received his paycheck. After paying his expenses he has $200 left over. He decides to purchase bitcoin with this money. He feels like the exchange rate might drop a bit and so to get them as cheap as possible, he transfers his money to the exchange and creates a limit order to purchase 6.25 BTC at $32 each.
David just received an inheritance of $10,000. He decides he'd like to hold the entire balance as bitcoin. He has seen the exchange rate varying between $31.50 and $33.50 lately, and hopes he can get the entire balance at $31.50. He creates a limit order at the exchange for 317.460317 BTC at $31.50 each.
Earl is in a hurry. He just wants to buy something from Overstock.com right now, and he'll take whatever the current exchange rate is. He needs $60 worth of bitcoin. He transfers his $60 to the exchange and places a market order for $60 worth of bitcoin. The exchange sees that the cheapest offer to sell bitcoin at their site at the moment is Bobby's offer of 2 bitcoin at $32.55 each. The exchange transfers the $60 from Earl to Bobby and at the same time transfers 1.84331797 bitcoin from Bobby to Earl.
At this hypothetical moment the current bitcoin price is therefore $32.55, since that is the most recent exchange that has occurred.
Earl now has 1.84331797 BTC
Bobby now has $60 and 0.15668203 BTC still available for someone to purchase from him at an exchange rate of $32.55 per bitcoin.
Now Albert suddenly realizes that he doesn't have enough other funds for his bill. He needs $334.50 right away to pay the bill, and needs to sell the bitcoin quickly to get the necessary money. Albert cancels his limit order and places a market order to sell $334.50 worth of bitcoin. The exchange sees that the most expensive offer to buy bitcoin at their site at the moment is Carl's offer of 6.25 bitcoin at $32 each. The exchange transfers $200 from Carl to Albert, and 6.25 bitcoin from Albert to Carl. Since Albert still needs another $134.50 worth of bitcoin to fulfill his order, the exchange sees that the next highest offer is David's offer of 317.460317 BTC at $31.50 each. The exchange transfers 4.26984127 BTC from Albert to David, and $134.50 from David to Albert.
At this hypothetical moment the current bitcoin price is therefore $31.50, since that is the most recent exchange that has occurred.
Albert now has the $334.50 that he needs, and still has 89.4801587 BTC remaining.
Carl has picked up the 6.25 bitcoin that he wanted, spending the $200 that he wanted to spend.
David has purchased 4.26984127 for $134.50, and still has a limit order out there waiting to be filled for another 313.190467 bitcoin at $31.50 each.
You'll notice that there are actually many "prices" for bitcoin. There is the price that each individual is willing to buy or sell their bitcoin for. Some of the more often quoted prices are the "current Ask", "current Bid" and "most recent exchange".
Prior to Earl coming along, the "Current Ask" was Bobby's $32.55 that he is asking to sell his bitcoin (the lowest price anyone is willing to sell for at that time).
The "Current Bid" was Carl's $32 bid to purchase bitcoin from anyone willing to sell that cheap (the highest anyone is willing to pay to buy at that time).
Supply and demand.
It trades on the free market, if more people want to buy prices goes up, if more people is selling price goes down.
It trades on the free market, if more people want to buy prices goes up, if more people is selling price goes down.
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