Topic: where does the price of bitcoin come from? - page 3. (Read 499 times)

It's unrealistic someone would buy at that price now, but such a trade would only affect the price on binance, not the global market as there are many other exchanges.
And this would only affect the binance last trading price, up till the next trade is completed.

In summary: Buyers and sellers.

Bitcoin doesn't differ much from every other asset, product, commodity. It has a demand. It has a supply. It has an equilibrium price. It has a equilibrium quantity. Whenever the demand for a product increases, so does the price and the quantity that the buyers and the sellers agree upon.

For example, if people suddenly want to get rid of their bitcoin, because, say, they feel anxious about what's happening in the world, they will be willing to sell it lower than the price they were willing to sell it previously. That's a decrease in demand, which will drop the price.

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One cool thing that's different in bitcoin is the production. Normally, if the demand of a product increases, so does its P_E and Q_E, and if the supply of a product increases, the Q_E does too, but the P_E decreases. This means that if there's a concurrent increase in both the demand & supply, P_E is counterbalanced.

The supply curve of an inelastic product, such as diesel, looks like this:


The supply curve of bitcoin is perfectly inelastic*, parallel to the Price Axis:


That's because the supply of bitcoin cannot be altered due to a change in the price. There will be 6.25 BTC brought into circulation every 10 minutes, then it'll be halved to 3.125 BTC etc. Therefore, when there's an increase or decrease in demand, there's nothing else that can equilibrize the price. That's one of the reasons it's highly volatile. 

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*Note: Again, for the sake of simplicity, we can assume the supply is the coins in circulation and not the exchange's liquidity.

Does it mean that if I create a seller account on binance and I set my bitcoin to the value I want for example 70 thousand dollars, if someone buys it at that price then the bitcoin will go up worldwide to 70k or only on the binance website?

there are dozens of exchanges. with millions of people. they compete with each other.

usually if one exchange is cheaper than the other. a competition of 'arbitrage' plays in wher epeolpe withdraw from the expensive exchange and deposit into the cheap exchange and buy it cheaper to then sell on the expensive.

this eventually levels out the exchanges to be nearly on par with each other when sudden price events happen on one exchange

and thats where people then see a good 'price' representation, when lots of exchanges are showing similar numbers
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an exchange has a list of people selling coins, they go in order of price. meaning the guy with the lowest sell price gets his order filled first.

an exchange has a list of people buying coins, they go in order of price. meaning the guy with the highest buy price gets his order filled first.


EG if the current top buy order was $29,700. and lowest sell order was $29.701 you cannot just put an order to sell at $22k and it fills and changes the price immediately to $22k

what would happen is your sell order would go to the buyer at $29700. and you would have to have ALOT of coins to THEN fill all the buy orders inbetween from $29700 all the way down to $22k
and you would be stupid to be trying to sell so many coins down the price especially if you bought/acquired the coins for more then what your willing to sell for.
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as for value(not price)
over the expanse of multiple years of acquiring bitcoin from users. people dont want to sell for less than they acquired it for.

so if the cheapest mining on the planet this year is about $25k/btc none of the miners anywhere on the planet would dare sell for less than $25k.
as for just investors. yes some are 'old timer' / 'early adopters' but the majority are newer investors that regularly buy and sell

so when someone sold some old 2012 mined coins in 2018. the purchaser of the coins buying in 2018 sets his acquisition cost at the 2018 price NOT THE 2012 price.
so even though the coins were originally mined in 2012 at $6 they are now valued by the current holder in 2018 for alot more and he wont sell for less then he bought them for in 2018

this causes a nice support line of most investors and all miners valuing coins above $25k this year
with certain percentages of people in different situations having coins acquired for alot more thus not going to sell for less than $30k-$70k and simply holding/hoarding and waiting for the price to rise
and very very few 'early adopters' left with coins actively in exchanges willing to sell below certain support value amounts

as time passes and mining costs increase and the 'realized utxo value' increases. this 'bottomline value' increases. which raises the support of the bottom no one wants to sell below.

the PRICE sits ABOVE this bottomline value. (not seen on exchanges, its a hidden wall no one wants to break and fall below)

as for any predictions of the next PRICE, the next high, the next speculative bump the next volatile movement .. well thats just speculative competition above the bottomline support which is not predictable

The price you see on cointrackers is determined by a curation of last sales on different exchange platforms.

Exchanges have buy and sell orders set to specific prices which the buyer wants to buy at or the seller wants to sell at.

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• Mr. Bob puts 1BTC up for sale at the value of $29,700 on binance, that's the price he wants to sell at,
• Mrs. Jane takes up his offer and buys his bitcoins in exchange for $29,700,
• Once the sale is confirmed, that would be the displayed Bitcoin price on binance, until the next trade that is, this is why the value is always changing.

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Coin trackers like CMC and coingecko check the current trade price on several exchanges to arrive at an average, which would be their displayed bitcoin price.
No one controls this system, it is purely community based (decentralized).

Bitcoin is not regulated by any financial authority, so its transactions are irrevocable. Technically the price of bitcoin is mainly determined by supply and demand, other factors can influence the price of bitcoin such as regulations and reputation.

I think you have just answered your own question there mate,nobody controls the bitcoin price its purely speculative (basically reflects speculation on its future value ) and up to the market  to decide.

Is that something serious? Can't you predict tomorrow Bitcoin will be $40K? I think you can and we can't prevent you. Usually, people predict Bitcoin prices. It doesn't mean they control the price, no matter who predicts. Bitcoin is always decentralized and the price will be based on buy pressure. Mean depends on demand and supply, to be honest. Nothing wrong to predict, just do your own diligence.

who is the person who says that today it should be worth 40k and tomorrow 42k? isn't it something decentralized that nobody controls? who agrees on the price to be like this?