Keep in mind, you and most users are talking about centralized exchange, not decentralized exchange or P2P. All centralized exchanges always rely with the average price of every centralized exchanges, this is why the price almost similar with one to another.
While decentralized exchange or P2P, the price is only depend on supply and demand. Right now Bitcoin price is $29,200, but people might be willing to buy Bitcoin for $28,000 or $31,000 depend on the seller.
Topic: How is the Exchange Rate of Bitcoin to USD and Other Currencies Determined? - page 2. (Read 236 times)
July 24, 2023, 06:32:06 AM
July 24, 2023, 06:00:29 AM
However, what consistently boggles my mind is the question of how is the exchange rate of Bitcoin to USD and other currencies determined?
Just as bonds, stocks, gold and the value of other assets are tied to the US dollar, which is the world's most traded digital/physical currency, so is the value of Bitcoin tied to it also, whose value fluctuates due to demand and supply just as "ranochigo" earlier said above. But another thing you need to understand that the value of Bitcoin in fiat is determined by the value of that fiat currency to the US dollar, which is always controlled by the government of that nation with respect to its economic stability or instability.Example:
We all know the price of Bitcoin have been around $30k for the past 1 months now, right?
2 weeks ago the value of Nigerian naira to dollar was #750 per $1
But today, the value of Naira have fallen, and $1 is now #850
So, 2 weeks ago when $1 was #750, for you to buy 1BTC, you needed to have #750 x $30,000 = #22,500,000
But today, for you to afford 1BTC now, you need #850 x $30,000 = #25,500,000
Note: which means that the value of BTC didn't increase, but the value of my fiat currency dropped, which is another factor that determines value of currencies
July 24, 2023, 05:44:48 AM
The exchange rate of Bitcoin is primarily influenced by the fundamental economic principle of supply and demand. When there is high demand for Bitcoin and limited supply available for sale, the price of Bitcoin tends to rise.
July 24, 2023, 05:02:58 AM
what consistently boggles my mind is the question of how is the exchange rate of Bitcoin to USD and other currencies determined?
As you've already been told earlier from previous comments, the exchange rate of any currency depends on their demand and supply rate in comparison to the value on it and the worth each currency is in respect to USD, when the market surges and the demands increases, there's more possibilities for an increase in the price value and therefore the market rises and the exchange rate increases as well and take effect immediately, marketers uses this informations on this gotten from reliable exchanges and trading platforms to form their average price after series of collections on various market price from different platforms.
July 24, 2023, 04:44:23 AM
It allows a bitcoin enthusiast like me to keep track the market movements without stress.
The more time you look at price or chart, more stress you will have, not less.Watching price, looking at chart and reading news are bad combination to make you mores stressful and more emotional in this volatile market. If you don't look at price after like 3 or 6 months, it can be the same.
If you watch and read it daily, your nerves will more stressful fluctuate with price.
July 24, 2023, 04:07:35 AM
Most of the volume is in USDT, USDC and other stablecoins because that’s how traders usually work. It’s much riskier to trade against other alts. So the live chart is mostly the most recent USDT transaction. Whether that was a sell or a buy, it’s that price.
Otherwise, if we include all pairs, the algorithm is much more complex. It’s not impossible nor is it necessarily hard to calculate, but I don’t see the point really unless the coin has a very low volume. Big exchanges have huge volume so it’s pointless to make complex calculations. Moreover, it’s a kinda risky business too. If you include all pairs in the calculation process, then you’re about to include pairs with extremely low volume too - which may temporarily significantly influence the calculation at some point.
Anyway, if there’s a high volume BTC-USD pair and a low volume BTC-LTC pair, even then the difference between the USD valuation of both pairs can’t be significant for too long either due to traders quickly finding out about the difference and eliminating it through trades for profit.
Otherwise, if we include all pairs, the algorithm is much more complex. It’s not impossible nor is it necessarily hard to calculate, but I don’t see the point really unless the coin has a very low volume. Big exchanges have huge volume so it’s pointless to make complex calculations. Moreover, it’s a kinda risky business too. If you include all pairs in the calculation process, then you’re about to include pairs with extremely low volume too - which may temporarily significantly influence the calculation at some point.
Anyway, if there’s a high volume BTC-USD pair and a low volume BTC-LTC pair, even then the difference between the USD valuation of both pairs can’t be significant for too long either due to traders quickly finding out about the difference and eliminating it through trades for profit.
July 24, 2023, 03:45:47 AM
Supply and demand. Each exchange has separate markets for each currency which fluctuates based on the recent trades. You can see the offers to buy and the offers to sell.
Exactly. But on exchanges and other trading platforms. Which is also where other sites take their price from.Those like Cointelegraph which is a news site is different. Also the price on Coingecko and Coinmarketcap are different. The exchange and coin listing sites take the average price from all the exchanges they listed on their platform.
July 24, 2023, 03:38:09 AM
Supply and demand. Each exchange has separate markets for each currency which fluctuates based on the recent trades. You can see the offers to buy and the offers to sell.
Your demand is actually adjusted to the real FX rates of your fiat, but with some degree of lag as well. In addition, price tends to differ a bit between exchanges but they generally tend towards a certain price. That's where the arbitrage opportunities comes in.
Your demand is actually adjusted to the real FX rates of your fiat, but with some degree of lag as well. In addition, price tends to differ a bit between exchanges but they generally tend towards a certain price. That's where the arbitrage opportunities comes in.
July 24, 2023, 03:32:41 AM
If I visit these websites, each one offers so much valuable information surrounding cryptocurrency world. These platforms include Binance, Luno, Cointelegraph, Coinbase, CEX.IO, crypto.com, and coinmarketcap. The first thing that catches my attention when once the web pages open is the prominently displayed real-time (live) charts depicting the price of Bitcoin in USD. I enjoy looking at the charts because they provide a detailed visual representation of Bitcoin's value fluctuations over time. It allows a bitcoin enthusiast like me to keep track the market movements without stress. however, what consistently boggles my mind is the question of how is the exchange rate of Bitcoin to USD and other currencies determined?
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