Understanding cryptocurrency prices
How are prices determined?
Cryptocurrency prices result from supply and demand on exchanges. Unlike traditional markets, there is no single reference price. Each exchange maintains its own order book where buyers and sellers meet. The last price at which a trade was executed becomes the displayed price.
Why do prices differ between exchanges?
Price discrepancies between platforms arise from differences in liquidity, trading volume, and user base. This phenomenon creates arbitrage opportunities: specialized traders buy on the cheaper exchange and sell on the more expensive one, which tends to narrow the gap. In practice, transfer fees and confirmation delays limit arbitrage profitability.
Tip before converting
Always check the spread (the gap between buy and sell prices) before making a conversion. A wide spread means higher hidden costs. Also compare transaction fees across different platforms to maximize the amount you actually receive.