Answer: The price on LiteBit depends on various factors.
Factors that determine the price on LiteBit:
- Market size
- Price fluctuations
- Trade volume
- Influence of third parties
- Transaction costs
- Difference between supply and demand
The market size for Bitcoin, for example, is the value of all Bitcoins (that are in circulation) but added up. Suppose there are 17,000.000 Bitcoins in circulation with a value of EUR 8,000 each. That means the market size is EUR 136,000,000.000. The larger the market, the higher the price.
Every time a cryptocurrency is traded, the price can change. This is called the fluctuating of the rate. Due to the fluctuating price, the price on LiteBit can be different every second.
The trading volume is the amount for which a cryptocurrency has been traded in the past period (week or day). Let’s take Bitcoin as an example. Bitcoin may have been bought and sold for an x amount in the last 24 hours. The value of all these transactions added together (x) is called the trading volume. If there is a large trading volume, the rate may change and the price on LiteBit will change as well.
Influence of third parties
People or groups with a lot of money can manipulate the market. If a lot of money is invested in a cryptocurrency, the value of this crypto will increase. Cryptos with a small market (size) will fluctuate more than cryptos with a big market. If these investors ensure such an increase, the price on LiteBit will change as well.
Transaction costs of cryptocurrency
A fee must also be paid for a transaction on the blockchain. A fee is a small payment. The fee can be different for each crypto.
Difference between supply and demand
Diclaimer: All amounts presented below are for illustration purposes only and are not representative of actual margins. Please have a look at our buy/sell pages for the most recent prices.
The difference between supply and demand relates the amount that the buyer offers and the amount that the seller asks for the cryptocurrency. Let’s take Bitcoin as an example. In the example below, Bitcoin has a value of EUR 1.
The demand side (EUR) offers a maximum of EUR 0.90 for a Bitcoin. The Bitcoin holders (supply side) wants to get at least EUR 1.10 for the Bitcoin. If both the demand and the supply side stick to their prices, no transactions will be concluded. A transaction will only emerge if someone from the demand side decides to buy the Bitcoin and pays EUR 1.10 for it.
LiteBit charges a fee of approximately 2% per transaction. If the price of the example above is used and the Bitcoin has a market value (average price between purchase and sale price) of EUR 1, the price of Bitcoin on LiteBit is determined as follows:
The purchase price of Bitcoin:
Offer price + 2% LiteBit fee = Purchase price on LiteBit
EUR 1.10 + EUR 0.022 = EUR 1.12
The sale price of Bitcoin:
Asking price - 2% LiteBit fee = Sale price on LiteBit
EUR 0.90 - EUR 0.018 = EUR 0.88
In this example, the share for LiteBit is EUR 0.03. The total difference between supply and demand is EUR 0.24. LiteBit is responsible for only a small part of the difference in this example.
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