Who sets the price for crypto currency? - page 2.

Silver80

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Quote from: btcb3g1nn3r on August 31, 2021, 12:19:08 AM

hi,
still one thing I don't understand: if for fiat it's the central bank governor for a country that decides the local daily currency price against the other fiat currencies, who decides the price for crypto? Bitcoin Core software? Exchange platform software's AI?

thanks

this is like the classical economic theory "if supply increases and goods come out aka stock runs low, it will increase, and vice versa if supply is less then there will be a decrease in price" here you have to look at the sales chart on the market, that also happens in the case of dumps and pumps. I hope this helps.

HeRetiK

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Quote from: btcb3g1nn3r on August 31, 2021, 12:19:08 AM

if for fiat it's the central bank governor for a country that decides the local daily currency price against the other fiat currencies

The exchange rate of fiat currencies is not centrally defined either. Yes, some fiat currencies are pegged to another, giving a fixed predefined exchange rate. But that also only lasts until the peg is lifted. Some currencies may even have an "official" exchange rate and a black market exchange rate. However for the most part even the value of governmental fiat currencies are just free-floating relative to one another, depending on market forces which can only be indirectly influenced by governments (e.g. by printing more money or the buying / selling of foreign currency reserves). Then of course, there's factors such as goverment stability and wars, as mentioned by dkbit98.

Quote from: DdmrDdmr on August 31, 2021, 02:15:32 AM

Additionally, you’ll notice that bitcoin price will vary somewhat between different Exchanges, but not entirely. The specific liquidity on an Exchange affects its price.

The availability of fiat on and off-ramps also seems to play a role. Exchanges that offer limited or no options for direct fiat withdrawal usually have a slightly higher exchange rate than those that make it easier to withdraw fiat.

dkbit98

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Quote from: btcb3g1nn3r on August 31, 2021, 12:19:08 AM

still one thing I don't understand: if for fiat it's the central bank governor for a country that decides the local daily currency price against the other fiat currencies, who decides the price for crypto? Bitcoin Core software? Exchange platform software's AI?

Central bank governor is not really deciding value for respective fiat currency, but it is combination of several factors like supply and demand, government stability, war against other countries, etc.
In obvious cases with hyperinflation that we saw many times in history, supply becomes much higher (total supply is infinite btw) and there is no single person or institution that can control value of that currency.
There is always market manipulations for everything and that can obviously be controlled by coalition of government, banks and big tech.

Bitcoin has limited supply of 21 million coins, demand for coins is growing and there is no CEO to twist his arm and blackmail him to control Bitcoin.
Bitcoin Core is just a software that has no relation with fiat value of Bitcoin, but exchanges can manipulate Bitcoin price with printing of more Tether coins.
If enough people value what Bitcoin has to offer, that is money separated from state, than it will have higher value or maybe it's just fiat money losing it's value.

DdmrDdmr

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Additionally, you’ll notice that bitcoin price will vary somewhat between different Exchanges, but not entirely. The specific liquidity on an Exchange affects its price. Since offer and demand are not processed in a centralized manner, but rather on an Exchange by Exchange basis, so is the resulting price. Arbitrage plays an important role in flattening out the price difference between Exchanges.

Of course supply and demand themselves will depend themselves on multiple factors such as regulation, news, sentiment, global and local economics, buzz, and so forth, pushing or retracting demand in the process.

TheNineClub

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the market sets the price, that's why it's so volatile as it depends on how much is being bought or sold, and, calculated that with the amount of BTC available (and BTC is the main thing that dictates the whole of crypto), you get the prices. Also, as computation is getting better, BTC will be harder to mine so that will also be a factor in determining the price.

aoluain

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Yes its you, me and everyone else who is involved in buying and selling Bitcoin which
determines the price, this also includes the miners who sell their Bitcoin mining rewards
onto the market and also the traders who buy and sell Bitcoin every day based on chart
analysis and current trends.

But

There is also the "manipulation" factor by those who have enough Bitcoin to purposely move
the market in a particular way, up or down depending on how it can benefit them. These
would possibly include mining pools, exchanges and whales.

Something else to consider on a smaller level is the shillers and fudsters who try to
move the market by trying to infleuence other people to buy or sell their Bitcoin....or other crypto.

witcher_sense

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Quote from: btcb3g1nn3r on August 31, 2021, 12:19:08 AM

hi,
still one thing I don't understand: if for fiat it's the central bank governor for a country that decides the local daily currency price against the other fiat currencies, who decides the price for crypto? Bitcoin Core software? Exchange platform software's AI?

thanks

Since there is no central bank or any other centralized decision-maker to command the price of bitcoin or, more precisely, the exchange rate of bitcoin, it is you as well as other participants on the market who decide what the price of bitcoin should be. You can come on the market and try to sell your coins at whatever price you want, but you will soon realize that if you want to sell it quickly enough you should set the price as close as possible to that, which most of the market participants agreed with. The price is constantly changing and fluctuating because sometimes someone sells their coins cheaper than the actual price, or buys coins at a higher price. It all depends on how hard you want to sell or buy.

mk4

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Short answer: supply and demand

Slightly longer answer: The price of a certain cryptocurrency on a certain exchange is set by the latest buy or sell offer that has been executed on an exchange. As for the prices you see on CoinMarketCap, it's the average price of that certain asset on all the listed exchanges.

The same reason how market supply and demand is what determines the prices of gold bars, baseball cards, fruits/vegetables, and such.

btcb3g1nn3r

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hi,
still one thing I don't understand: if for fiat it's the central bank governor for a country that decides the local daily currency price against the other fiat currencies, who decides the price for crypto? Bitcoin Core software? Exchange platform software's AI?

thanks

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