How are the prices of cryptocurrency on LiteBit created?

There are two different prices per crypto on LiteBit. These are the buy price and the sell price. The buy price is the bid price on the market plus the buying fees of LiteBit. The sell price is the ask price on the market minus the selling fees of LiteBit. This amount is therefore always a lower amount than the buy price at that point in time

The buying fees of LiteBit differ per crypto. With Bitcoin, these are below 1%. For altcoins, these percentages are between 2-5%. For altcoins there are often additional exchange costs, because sometimes it is only possible to trade on BTC markets for that altcoin. See also the factors that determine the price below.

The selling fees are separate from the buying fees and are approximately the same percentages. These are only charged when you sell your crypto. Please note that the euro value that is visible in the wallet (or portfolio on the app) already includes these fees. The amount you see there is therefore also what you will receive.

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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