Who sets the price for crypto currency?

[btcb3g1nn3r]

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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[mk4]

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.

[witcher_sense]

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.

[aoluain]

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.

[TheNineClub]

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.

[DdmrDdmr]

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.

[dkbit98]

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.

[HeRetiK]

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.

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.

[Silver80]

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.

[hatshepsut93]

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

This isn't even true for all fiat currencies, most countries basically let the free market decide the price and the central bank participates on this market to lower the volatility, i.e. it buys the national currency when it goes down and sells it if it grows too fast. There are still some countries that fix exchange rate, but they are a minority.

[btcb3g1nn3r]

Can I conclude that the Exchange software is setting the price? Of course, the price is set based on the demand/supply but that software takes care that in case a whale will buy a coin (as example), the price will not stay unchanged.

[HeRetiK]

Can I conclude that the Exchange software is setting the price? Of course, the price is set based on the demand/supply but that software takes care that in case a whale will buy a coin (as example), the price will not stay unchanged.

No. The exchange software is not setting anything, it's merely matching buyers and sellers. The price you see on the ticker is where the highest bid of a buyer meets the lowest ask of a seller, ie. the price at which a sale takes place.

[Upgrade00]

Can I conclude that the Exchange software is setting the price?

No. As mentioned above, exchanges link buyers to sellers, and the exchange price is determined by the price of the last sale of that currency. There are bids (amount traders want to pay to buy) and asks (amount traders want to sell for), none of them is determined by the exchange.

Of course, the price is set based on the demand/supply but that software takes care that in case a whale will buy a coin (as example), the price will not stay unchanged.

Can you explain more what you mean by this question? Transactions have a momentary impact on the overall price, up until the next one. Reason why market manipulation is a huge risk as the market can simply adjuf to the previous price range after a huge dump from a whale.

[mk4]

Can I conclude that the Exchange software is setting the price? Of course, the price is set based on the demand/supply but that software takes care that in case a whale will buy a coin (as example), the price will not stay unchanged.

Is the exchange software the ones that buys and sells the coins? No, it's the users (in terms of entities, not back end technicalities). Saying that the exchange software is what sets the price is like saying the Bitcointalk SMF forum software is what makes topics and posts replies.

[cryptoaddictchie]

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

I think the community. Even got listed on the market for the very first time it is the traders who decide at which valuation we should buy and sell it. Typically if its a good project then its highly above the ico price or the rate which tokens have been pruchased during any kind of sale.

Exchange somehow affect it by using market maker but its always depend on the traders.

[masulum]

Can I conclude that the Exchange software is setting the price? Of course, the price is set based on the demand/supply but that software takes care that in case a whale will buy a coin (as example), the price will not stay unchanged.

Do you mean fake volume from an exchange or use a bots? for Bots, IMO, they only do sort-terms to disturb trader psychology, and the creators of course already have a calculation to make a profit by buying/selling with their bots. And this is still in demand as explained by other members. the difference, they do automation with programs that have been designed. in terms of the process, it is still the same as the manual trading method without bots. (CMIIW)

[sujonali1819]

First of all the price is set by the project team. And they decide it according to the Total/Circulating supply of the currency. Then it’s decided by the communities / traders according to the demand and usage od that currency.  In one word we can say crypto price is decided by it’s supply, demand and it’s usage.

[Porfirii]

So, taking into account all that has been said above, it seems that the way the price is set is different in the case of Bitcoin compared to many other cryptocurrencies. I suppose that the question should be answered on a case-by-case basis (while it may be true that as a general rule it is set by supply and demand) as fundamentals usually differ enormously.

[Smartvirus]

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.

Bitcoin has limited supply of 21 million coins,

These are some of the best answers to your question @OP and it won't be wrong either to put it to you that, you do set the price if bitcoin. Its not some  abstract thing but, each time you hodl or sell a coin, you create some sort of value  for that coin because, your either flooding the market with it or ensuring its limited supply where as, its scarcity and that's how the law of demand and supply works.

Bitcoin is limited in its supply to what is stated above but  then, not all are in circulation yet and should it be that, the last bitcoin minded someday, not all of it would be ready for sales in the market and as such, the price continues to be determined by this actions of crypto enthusiast.

[mk4]

First of all the price is set by the project team. And they decide it according to the Total/Circulating supply of the currency. Then it’s decided by the communities / traders according to the demand and usage od that currency.  In one word we can say crypto price is decided by it’s supply, demand and it’s usage.

The team decides upon the supply cap and the supply distribution, not necessarily the price.

So, taking into account all that has been said above, it seems that the way the price is set is different in the case of Bitcoin compared to many other cryptocurrencies. I suppose that the question should be answered on a case-by-case basis (while it may be true that as a general rule it is set by supply and demand) as fundamentals usually differ enormously.

The law of supply and demand and the way CoinMarketCap/CoinGecko scrapes price information from multiple crypto exchanges is literally the same for every single cryptocurrency.

[Porfirii]

TY mk4, I misunderstood the OP's intention as I was thinking about the speculation side too (who makes the price go up and down... as he mentioned the central bank governor of a country for fiat, dependent on politics and economic interests) instead of only the way the prices are calculated in CMC or similar.

Of course, the way these prices are calculated is the same for all cryptos afaik too.

[Ecg007]

Prices are being instigated on the buy and sell offer in the coin market cap which is a phenomenal that is not static but dynamic and by so doing the market cap has its say to the day to day prices in the crypto currency.

[Mpamaegbu]

While I agree that market forces of demand and supply finally sets the price of any asset, I want to also point out that price of any asset is first determined/set by asset team or owner. Look at what happens during ICOs, IDOs, IGOs or even IEOs where prices are known and fixed even before the assets hit the market. So, it's not entirely true that the market sets the price from the onset.

[Luffygroove]

IMHO, before jumping to cryptocurrency, you need to know the basic thing about it. The most basic principle about cryptocurrency is it's decentralized. There is no single institution that controls the cryptocurrency because it's basically based on the p2p principle. So, the price will be built by supply and demand among people who trade it. However, we can't be blind that's actually there are some parties who handle a big amount of it, which is called the whales. Not seldom, they're the ones who control the price movement.

[pooya87]

The most basic principle about cryptocurrency is it's decentralized.

Not true. In fact majority of cryptocurrencies (aka altcoins) are centralized to some degree, some even fully centralized for example the stable coins such as Tether are completely centralized. There are others like ethereum that are mostly centralized and some that have some traces of centralization.
This has been one of the main reasons why many altcoins have been referred to as "shitcoins".

[GeorgeJohn]

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?

From my perception bitcoin price is regulates through market total number of supply and demand, because nobody control the regulation of bitcoin like fiat currency as you stated and it's the reason while fiat is called centralized currency to it have governor who is in control of it's regulations and determination of it speculated values whereas bitcoin is decentralized and it regulate itself through market functional structure.

[SteveHankse]

Nobody controls bitcoin. Banks are not even in the picture. The price of bitcoin and other cryptocurrencies is the outcome of supply and demand. The change in buyers and sellers for the coin results in its price movements. The price varies a little from one exchange to another. The supply and demand is also affected by external factors such as news and regulations on crypto exchanges by the government.

[izumikoushiro]

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

Based on the information I got, the price of Crypto Assets depends on the balance of supply and demand. This is the law of the market. When a Crypto Asset is popular and in high demand then its price will go up. Vice versa, if supply is high while demand is low, prices will fall and the amount or quantity of the crypto asset itself. The volume of crypto assets such as Bitcoin and Etherium is still very small and the distribution is uneven so that the price value will be greatly influenced by the actions of the holders of these crypto-assets in making sales or purchases.

[TheNineClub]

also short answer: a lot of factors. The aforementioned Supply and Demand, but also governmental entanglement, even with crypto as being decentralized does not mean your users do not fall under government regulations. Speculation and predictions can also be a big factor as to what makes it go up and down. For instance, a third wave of BTC rising can indicate and therefore be speculated that it will rise again for the forth time and just by that an increase happens. Call it momentum in a way.