How are the prices of cryptocurrency on LiteBit created?

The price you see before buying or selling your crypto, is the market average price. This means you will see just one price for crypto. Up until recently we showed two different prices, which were the buy and sell prices. These had all costs already included.

To provide more clarity for you as a customer, we have decided to display the trading fees separately. You will see the fee relevant to your buy or sell order, once you place an order. It will show you how much crypto you are buying or selling, what the value is and what the total costs are going to be.

Be aware that buying and selling are still two separate actions. Both have trading fees. The value you see in your portfolio/wallet will be the current average market price. This means that right after buying, the euro value will most likely be slightly less than your buy order, due to trading fees.

The same principle applies to selling. Whenever you decide to sell your crypto, you will see the current average market value of your crypto in your portfolio/wallet. Upon selling, this value will be slightly lower, again due to trading fees. All relevant information is displayed in the order preview.

Factors that determine the price on LiteBit:

  • Difference between supply and demand
  • Market size
  • Price fluctuations
  • Trade volume
  • Influence of third parties
  • Transaction costs

Difference between supply and demand

As a broker we trade on exchanges. On these exchanges there is not a single price for crypto. There is an ask price and a bid price. The difference between these two is usually minimal, but there are some exceptions. In those cases the difference can be several percentage points. Please note these differences are not part of our fees, but are still taken into the equation if you compare buying to selling prices. This is called the market spread.

Market size

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.

Price fluctuations

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.

Trade volume

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.

If a crypto has a low trading volume, this can cause volatile price fluctuations. Due to this risk the fees on some altcoins are higher compared to "safer" markets like BTC.

Please keep in mind there is always significant risk involved in trading crypto due to price volatility. 

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.

 

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