What the term “Bitcoin price” really means…

While many people follow Bitcoin’s price, not everyone knows exactly how this price is determined. Bitcoin is unlike traditional assets such as stocks or commodities, so there are some surprising differences in the way its price is calculated.

When talking about Bitcoin’s price, people are usually referring to either the USD price on a leading exchange (such as Bitfinex, Binance, or Bitstamp) or a composite price made from the average of multiple exchanges’ prices (e.g., CoinMarketCap).

When people talk about the price on a certain exchange, they mean the price of the last transaction made on that specific exchange.

So for example, if the price of Bitcoin on Bitstamp is $10,000, this means that the last trade made on Bitstamp was closed at $10,000. Once a new trade is conducted, the price will be updated accordingly. As Bitcoin is a decentralized asset that trades on hundreds of exchanges and between countless individuals around the world, there is, in fact, no singular Bitcoin price. Each exchange has its own price for Bitcoin, although these prices are usually quite similar.

To learn what keeps all these different prices roughly synchronized, read more here…
What Determines the Price of Bitcoin? (Or any Other Cryptocurrency) | 99Bitcoins

 

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