Bitcoin Forum

I always wonder How Cryptocurrency rates especially BTC Fluctuate so quickly? I mean is there any system on which there rates are decided? If so, what is it?

Well, mainly, eversince, the supply of bitcoin/cryptocurrency, and the market demand. Exchanges have a huge factor of it - the price and volume.

I suppose its always a market sentiment that could be influenced by external factors and these are implemented mostly by a myriad of trading bots that executes buy and sell orders and have a ripple effect towards every crypto markets fueling volatility.  :)

Actually, market price determines by the seller/buyer. When suddenly increase sell pressure then the price would drop suddenly as well. If suddenly increase buy pressure then the price would be increasing as well. But the initial price depends on many things and I think your question isn't about the initial price. So we can say that price influences of bitcoin or other crypto come from the exchange since trading happens on there. There is one more thing, market manipulation. You should learn about it to know better research about price calculation.

Because especially compared to other assets like gold and higher-cap stocks, liquidity is a lot lower with bitcoin. Stocks and gold has existed for so long already that a lot of people and a lot of machines are trading them back and forth a lot of times on the daily and there are far more buy/sell offers on the market that it will take a lot more to move the prices of these assets. As with bitcoin, it's just more than a decade old, and is very very easily affected by news and rumours knowing that a lot of people that are buying and holding bitcoin never traded anything in the past before(hence mostly far more inexperienced with investing in general, hence easily affected by their emotions).

Assuming you're referring to prices from sites like Coinmarketcap, the Coinmarketcap price of bitcoin and other cryptos is the average of these coins' prices on exchanges. If you're talking about specific exchanges, then prices of coins are decided with the latest executed buy/sell trade offer.

The prices depend on exchanges and the demand for BTC against altcoins for trading at any given day. The price fluctuations are mainly driven by bot traders looking to get the most out of arbitrage trading as well as by swapping Alts to gain more BTC during their upward moves. BTC moves also depend on market sentiments of adoption, regulation or hacks.

There is a huge category of low liquidity cryptocurrencies which are listed on almost no exchanges and as soon as people FOMO, the prices tend to pump up as bag-holders will continue to raise prices depending on incoming volume. Lots of bot trading and whale manipulation goes on in pumping the prices of alts. The only prices that you can safely assume to be linked with demand and market sentiment is for BTC. Rest of them all is either whale manipulation or rumors about "Projects".

A lot depends on the volume of known exchanges like Coinbase, Binance, Kraken, and others. The cryptocurrency market is relatively new and evolving, with time and more investors coming into the market the volatility will decrease. It all depends on the Marketcap the more it is the less volatile the market will be.

Its pretty easy to be whale in crypto, whales could manipulate price as they want. Also, a lot of fomo and fud here, that's affect the price too

How on earth it is pretty easy to become a whale in crypto? I would like to know!

Whales are definitely there but they are not the only reason why bitcoin price fluctuates. It's just one of the many reasons out there! What fluctuation you see, is one of the rawest form of human emotion without any centralized authority to step in.

FUDs usually play a role but it's super temporary unless that FUD comes from any world leader or someone supremely powerful.

Supply, Demand. And both are much more fast moving than conventional markets. It trades 24/7 worldwide. It is also a very thin market, there may not be many buy or sell orders maintaining that price and it doesn't take much to demolish them. Traditional markets are like supertankers, slow and sluggish and deep. Crypto is like a fly in the wind in comparison. It's far more vulnerable to being blown about by a modest breeze.

A single news probably from a senate hearing can cause the price to dive down to 20%, whenever they hear something is up to happen the fluctuation could happen quicker than you can open your phone to bid. Traders out there are just quick to take profit whenever there is opportunity and they'd do it before you can sell yours. The fewer the supply to more you have to hurry else you will have to buy back for a higher price due to the demands.

Another factor is that many people in this market won't have any experience of any other type of trading and will never have traded before. We see screechy kiddies whipping themselves up into a whirlwind of hysteria and blowing it here every single day. The proper pros know they're easy pickings so they keep fleecing them over and over again.

It's not like this scene is overflowing with balanced adults.

In terms of value in the market, the main reason is always the demand and supply because these are the primary factor affecting the price movement in the market. I think many people are selling their bitcoins that's why it's value suddenly pulled down. Also another factors that affect the market movement is the implemented trading bots to executes buy and sell order very fast.

Free market--virtually everyone can participate in the trading action so long as they have the money and the guts to do so. Even with exchanges imposing strict KYC rules, platforms that offer decentralized trading action can be utilized in order to participate in this huge market. Also, the supply and demand is ever-changing, with impasses happening for a few moments then the next thing you know the price either crashes or rushes upward. And given that no tight regulation is in place for the trading activity of cryptocurrencies, you can see that once momentum is built up on either side of the board, it keeps on rolling until the market makers says stop.

It is true that majority of the investors have never traded before and those are especially who started with BTCitcoin from the start and have accumulated a lot of coins and they might have traded like kiddies in the past but right now there is enough time for any major holder to learn the trade and anyone who invested at a later time has the knowledge about trading.

I believe major fund houses has hands in the market and they are capable of creating a major sell off and book their profit and then enter again after a small correction.

It's a lovely idea. We all know that's not going to happen. Even people who've been here since double digit bitcoins have freaked out and blown it. Most people simply are not built to be successful traders no matter what they do. That's how it is and how it'll always be.

That's different from holders. I know enough to know that I'm shit at trading and shouldn't go anywhere near it. Some have to lose a lot before figuring that out.

Easy to say but becoming one, I don't think that it will ever happen to me based on what you are saying that it's easy. The factors that you have mentioned such as news, it does affect the market.

Bitcoin is highly volatile and that's why it fluctuates so much. Just like the answer by most about supply and demand, it all happens at the same time. If more people are selling, you'll notice it as it's dropping quickly and vice versa.

Sometimes I doubt with whales in crypto, sometimes I am thinking that these whales are just a myth. It's kinda difficult.
FUD sometimes is also one of the reason why BTC fluctuate quickly and for sure if you have lot of money you can make BTC price actions fluctuate.
But what I really know, it is based on the buyers and sellers, the bids or asking prices.

Supply/Demand, the basic principle, the higher the demand, the price is obviously getting to be positively affected. So there are no written system per se, but supply and demand are affected by a lot of factors, i.e. negative news, hype or FOMO then manipulation.

Sometimes I doubt with whales in crypto, sometimes I am thinking that these whales are just a myth. It's kinda difficult.
FUD sometimes is also one of the reason why BTC fluctuate quickly and for sure if you have lot of money you can make BTC price actions fluctuate.
But what I really know, it is based on the buyers and sellers, the bids or asking prices.

Supply and demand. Price mainly fluctuates due to how volatile it is right now, but a middle point should be achieved in the future since supply is still currently increasing. There are a lot of speculations out there, and mainly due to the idea of Bitcoin being an investment, it resulted in fluctuations in the price, especially during times where speculations and the like spike up, whether it be positive or negative news, as long as it's news about price speculation, it would always affect it one way or another.

Also due to the decentralized system of BTC, it can't really be affected by any centralized government, even if they tried to. Even if BTC has no backing, it is because of such that no one can really touch on how the market moves and would solely rely on supply and demand.

I am not sure what rates you are pointing out. I assume that you are asking for a price rate that could be our basis in buying or selling.
Since Bitcoin price is not controlled, it was you as a buyer or seller to decide what would be your rate. Why whales could affect the price is that because when they dump, the price drops as well or in the opposite way. Then we are saying there is market manipulation in crypto. Have to believe that instances? Maybe we should.

As in a normal financial market, the price depends on the events (political, economic, social, and technological) taking place in the world. For example, if a war with America begins in Iraq, then we should clearly expect a movement in the dollar in the near future. Or for example, the coronavirus has hit the financial sector very hard.

I agree that it's not easy when we talk about Bitcoin (I believe it's next to impossible and that 'whale manipulations' talks are more like conspiracy theories). However, this person said 'in crypto' and there are tons of shitty altcoins that can be manipulated with relatively low amounts of money, so I guess it counts as being a whale (relatively, of course).
And I agree with tulpe123 that FOMO and FUD play a massive role in price formation. Sure, it's demand and supply in theory, but often the demand varies greatly due to some speculations or mildly related to Bitcoin events that trigger certain attitudes (sometimes positive, but usually negative), and that, in turn, leads to a significant temporary change of price.

This is economics 101, the price of everything depends on the supply and demand, however while that explains why the price of bitcoin changes and how its price is decided it doesn't explain, at least in an explicit manner, why the price of bitcoin moves so quickly, there are several reasons for that one of the most obvious is that despite the size of this market it is still very small compared to many other markets and as such it is easier to move it compared to them.

Another reason is that there is a great concentration of wealth in a few individuals which we call whales and as such they can move the price with their actions, finally the limited supply of bitcoin plays a huge factor because as soon as the demand skyrockets the supply stays the same and that obviously makes the price of bitcoin to go up very rapidly.

Yea it really depends on the supply and demand. Bitcoin price does vary on exchanges coz every exchanges has their own volume, you might notice that bitcoin price in some country is not the same as your exchange price, and there you'll realize that the huge factor of the price is the demand.
The demand is coming from different direction but most are being concentrated to the whales.

Now you might wonder why there is a demand for a digital coin like bitcoin, that's for another topic to discuss.

What drives the demand up high is the decentralization, coz many people wants to be pseudonymous when transacting online and it happened to be found in bitcoin. Another thing is from speculation, when people speculates it creates demand in some point but it's not always going high. So if you are asking why the price of bitcoin is rapidly going up and down, that's basically because of the mass speculation.

It is pretty much about the maximum capital. Crypto is still new so a whale can change and manipulate the price alone. Fiat is so widely used it cannot be manipulated so easily. As crypto grows and is divided more and more among more people it will become harder and harder to manipulate. The more they spread the harder to manipulate. This is why new projects are often a good idea to take part in because you can become a whale with greater ease.

Bitcoin marketprice is decided in supply and demand in the market, if you're familiar in exchanges you could clearly see the buying and selling section, it is not controlled by bots or code, etc. but it depends in the investors that are buying and selling bitcoin in the exchange, When a lot of investors selling their bitcoin in the market it is going to result to a drop in the market price in bitcoin, also when a lot of people buying or investing in the bitcoin market price is going to increase or pump. The demand is going to increase when no one wanted to sell their bitcoin in the exchanger, that just means in the buying section it would be in a higher price because people would want to buy bitcoin it needed to increase their buying price if they wanted to buy, if you set the buying price at a low market price it will be placed last in the buying section. Also in the selling section in the exchange, if you want to sell your bitcoin and set it at a certain price you need to wait for a buyer, other selling is going to sell their bitcoin lower than the price you set decreasing the market price.

You meant traditional high-cap investments/assets not fiat, right? Because if you really think that fiat cannot be manipulated so easily, the Federal Reserve's Jerome Powell would like to have a word with you.

Just think of it as the price each trader is willing to buy or sell the coins on the exchange because that's exactly what it's. Buyer A might want to buy at a certain price but will later change his mind the movement he see a downward trend of the price same in the case of the seller, when the market begin to show positive signs of upward movement, the sellers immediate cancel his order so as to sell higher than the initial amount.

This are done by active traders but mostly bots which is why if you didn't keep your emotional understand control while trading, you can easily get decieved by the movement of the market.

The "system" is basically all the buy/sell orders aggregated from the crypto exchange platforms,which are tracked 24/7.The rates are decided by the supply and demand.
If the sell orders are more than the buy orders,the price goes down and vice versa.
And it's not just the crypto market that works like that.The stocks and forex markets work exactly the same way. How difficult is to understand something so simple?

Because there are no limits of changes within a day like stock market. There is no circuit breaker for the market to stop panic. Crypto market now is a free one, free of limits, free of circuit breakers. Price can move up or down without any limits.

Price in turn changes fastly because of price manipulation and news. People invest in crypto but most of them don't know what is bitcoin, and what are waiting for them in crypto market. Then when bad news come they panicly sell and good news release they buy with joy of FOMO. They should do opposite as the saying goes "Buy the rumors, sell the news".

Rates are decided by the traders. At which price traders buy or sell = the current price of bitcoin. The reason behind fluactuations are speculation of the traders. If majority of the traders think BTC will go down, they start selling and so does some others do. As a result, the price decreases a lot and vice versa.

And with that, there is no system governing those fluctuations. As the OP is asking about system about such market trend. Market performance depends on various factors, and how traders react to certain situations will play a great role on how the trading market behaves. The movement is fast in crypto that's why it is called a volatile investment. If you are not ready to face this, better keep yourself in the stablecoin market for now.

I'd never see there is a system that controls the market price. we are still in the decentralized market and all the buying and selling price will always depend on us. If I sell my cryptos or even buy it today below the market price it is my choice but we can't simply think that it will be filled easily if the price trend going high.

If the majority are pushing the market high, it makes to follow and the same thing happens if they push it back down. We can say it was manipulation, not really sure but the market behaviors are truly affected when there is a huge buy and sell difference.

Like all things that have a finite supply, the value of a bitcoin is derived by the number of people that want to buy them vs the number of people that want to sell them.
 
If more people want to buy bitcoins than are currently for sale (for example if a surge of people want to start using bitcoins to transfer value across borders, see more on this below) then the price goes up.
 
If more people want to sell bitcoins than currently want to buy them then the price goes down.

That's right, which makes it an imperfect indicator, because the supply available on exchanges is a fraction of the total supply. In other words, the price of ~17 million coins is decided on trades performed upon a million or two that are available for trade around the world. The system is still fair, because it's assumed that if the exchanges were to run out of available supply, the price would skyrocket so much that people who don't hold their coins on exchanges would move them to take advantage of the event, but in the meantime we'd all experience extreme volatility. What you could see in March of this year was an example of what could happen and how easy it is to deplete bitcoin exchanges.

There are many factors why the bitcoin price fluctuates so quickly. First, a big dump from a whale meaning there is a massive selling order and the buying order can't keep up that is why the price of bitcoin will crash easily once it will happen. BTC price is base on demand and supply also.

The holders are what pushing the price upward, meaning those who buy and never sold their bitcoin are the one who increases the demand and once it happen the bitcoin price will continue to increase  as the supply was overtaken by demand. Traders have big roles also in bitcoin price as they can also affect the prices of bitcoin but the main character that are causing the bitcoin price to fall or increase easily are the big whales.

The market is manipulative, when a huge volume gets accumulated with a user he/she has got the ability to move the market. Most of the time, the whales unite together to make changes to the market according to their need. This manipulation is possible to certain point, because compared to the total volume into circulation what Whales have will be a part.

Next thing is the demand to the supply, here exchanges play a very big role. Each trade and the volume constitute to the market fluctuation happening with time.

Especially BTC? you should see some altcoins.

In the last 24h Bitcoin lost only 0.28% but XRP 2.7% and EOS almost 4%. Bitcoin usually is the most stable cryptocurrency ;)

There are many reasons but I'd blame fake volume on exchanges, fake USDt buy orders, low liquidity and bot trading among many other.

As you know, bitcoin is a speculative asset and factors like 21 million bitcoins supply, 4 years of block reward reduction, CME contract GAP, chart template, miner, FUD, and related news About bitcoin, all of these factors combine to make the value of bitcoin unstable. Bitcoin's current market cap is around $ 200 billion and its transaction volume is around $ 35 billion. It is still very low compared to other markets. If in the future more money is poured into Bitcoin, the price change in this market will be more stable.

Speculation is mostly done by people who want more profits. Whales are one that creates speculation about the price of bitcoin and other coins. They play the market with their money. Highly volatile prices are a characteristic of cryptocurrencies. So it is necessary to be careful when investing and trading in crypto. Market manipulation and speculation are always carried out by whales to achieve their desired targets.

This is an important factor when it comes to the volatility of bitcoin, most stock markets cease their operations if they crash too hard in a single day, while this may seem as if it is not a big deal we must remember that markets are dominated by basically two emotions and those are fear and greed, and when fear takes over the markets they collapse, however by closing the market temporarily those fears can be controlled and the price stops falling as fast.

Since bitcoin is a decentralized currency not such breaks exist, if panic takes over the market then all bets are off which is why the price can go down so rapidly as people panic and sell their coins at whatever price the can get.

bitcoin is one of the first coins created it's no wonder to see bitcoin becoming the most popular right now and the price of bitcoin is so high
but my advice if investing in bitcoin must be careful the market is in a state of correction afraid that the bear market will come again and last a long time

Actually there are several things that make bitcoin fluctuate very quickly, and because of the supply and demand in buying and selling in the market and besides that the Pope is very influential in bitcoin fluctuations and manipulates bitcoin prices according to the targets and strategies he wants.
There are many other reasons for bitcoin fluctuation and all there will be news about what is happening with the movement of bitcoin and other coins in the market.

Bitcoin's decentralized nature does not allow any system to decide a ceiling and floor for it's price.
Let's talk about the reasons-:

• First reason for such fluctuations is the varying demand of Bitcoin.For example if we talk about gold, we know exactly where it is used and we can somehow predict that when a hike can be observed in it's price.But it is totally opposite for Bitcoin. It's usage is not clear.Sometimes the demand is high and sometimes it is low but the supply remains the same.So that is why we observe a lot of up's and down's in it's price.
• Exchanges are also responsible for these fluctuations. If we talk about any trusted exchange.The number of users associated with it keeps on increasing.It builds a chain of users selling and buying their BTC's which also affects the price.
• Other reasons can be the manipulations done by whales according to their convenience, news regarding BTC on various platforms etc.

A number of factors cause BTC rates to fluctuate so quickly. They include:
1. News events that scare BTC users
2. BTC's perceived value sways
3. Uncertainty over BTC's future value
4. Large currency holder risks
5. High profile losses that cause fear
6. Security breaches that cause volatility

You can read further here:

https://www.investopedia.com/articles/investing/052014/why-bitcoins-value-so-volatile.asp