A HOT DISCUSSION TOPIC
The price of Bitcoin has been a hot topic for discussion for several months, if not years. In fact, Bitcoin's price is one of the most discussed topics in the entire cryptocurrency space. Discussions evolve around the price dropping or rising, in many cases significantly, hitting all time highs or as part of arbitrage opportunity explorations.
Recently, turmoil overwhelmed the crypto community due to Korean exchanges getting excluded from several popular cryptocurrency tracking and index websites. Billions of market cap value were wiped out of most coins, top 50 cryptos included, within a few seconds. The price of cryptocurrency coins like Ripple fell almost 30%.
If such a change in how Bitcoin's price is calculated by a few index sites can cause such huge drops and frustration it's inevitable to ask a simple but very important question:
WHAT'S THE REAL PRICE OF BITCOIN?
And the answer is...
It depends. Here's why.
Bitcoin's price behaves like most commodities that can be traded. The market is the one that determines the price. That's why the price gets affected by the characteristics of the specific market you are trading in. To some degree, Bitcoin's price depends on location. That's actually one of the reasons behind the Korean Exchanges removal turmoil.
THE CASE OF A TYPICAL US INVESTOR
A typical investor looking to buy Bitcoin from an exchange using his FIAT money (USD) in the USA shouldn't and wouldn't get affected at all by how much Bitcoin trades on a Korean or Japanese exchange. The only path he cares about when trading FIAT to Bitcoin (or any other crypto) and vice versa is the one that starts with USD and ends with Bitcoin. Of course one could find a Bitcoin holder offline and agree on a custom price to buy BTC using US dollars, but in this post we're examining a typical online trading case. Even in an offline, custom-priced transaction, the actual price would somehow be correlated to Bitcoin's publicly presented price.
At the time of this writing Bitcoin trades against USD in BitMEX, one of the largest exchanges, at $ 9,912.00. At the same time, in one of the largest Japanese exchanges, bitFlyerFX, Bitcoin trades for ¥ 1,116,123 or $ 10,521.82. One practice, mistakenly in my opinion, to calculate Bitcoin's price in USD would be to take those two values (9,912.00 and 10,521.82) make an volume-based average and present it to the US investor. Would that be wrong? Theoretically, no. Practically, it's nothing but wrong. It's actually the root behind the recent frustration for so many investors.
Now back to our question. What's the real price for Bitcoin?
Answer: For that US investor, the price of Bitcoin, presented in USD is $ 9,912.00. Period.
Or to make it more accurate, a solid practice would be to take the values BTC trades against USD in exchanges accessible from the US, do a volume-based average and then come up with the result. That's exactly how we calculate prices at Coinlib. Using that method, the price we present to the USA-based user (or any user who has set his coin of preference as the US dollar) it's $ 9,913.43.
We do that for any cryptocurrency coin and for any coin of preference you may select. If you are in India, you can set your coin of preference to Indian rupee, if you're in Europe to Euro and so forth. The price you'll see for Bitcoin, or Ethereum or any other coin will be calculated based upon the most probable path you would use to trade between the two currencies and if the volume is too low, based upon the closest path (you'll see a relative message).
KEY TAKAWAYS
- Next time you discuss about the price of Bitcoin, or any other crypto, take into account the context of the market and its characteristics.
- Bitcoin's price varies across countries, in some cases much. The price of cryptos may vary also within the same country/continent. Our Best Price Explorer tool will help you find the most profitable paths for any trading pair.
- To track the accurate price of Bitcoin in real-time, as well as historic data, you can use Coinlib.
You may also track any other crypto, setup your portfolio and use the bunch of cool tools we offer.
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