Why is The Bitcoin Price Different on Different Exchanges?
Even as a crypto novice, you may by now know that Bitcoins are traded on different crypto exchanges. But, have you ever noticed that if you compare any Bitcoin across exchanges at the same point in time on any given day, you’ll see differences in its price? The difference could be anywhere, between 1-2% to 4-5% on a busy trading day. For example, the Bitcoin price today in India, as of 15th December 2021, was ₹39,11,111 on ZebPay, ₹38,70,899 on WazirX and ₹4032556 on Unocoin.
So, how can the same asset be traded at two different prices? Let’s find out:
Bitcoin pricing
Bitcoin’s price depends on demand and supply. The supply of Bitcoins is limited. Precisely, a total of 21 million can be mined. It will deplete, once all of them are mined. So, then demand would supersede supply, and the price would shoot high. The trending Bitcoin price in INR, as of 15th December 2021, is ₹39,11,111.
Market size
Globally, market sizes are different - some big, some small. So obviously, there is a variance in the supply as well. And it’s not tough to decode that with constant demand and low supply, the prices go high and vice-versa. That is the reason why you see that the Bitcoin (BTC) price in India is higher than in the international markets. Given that there are a handful of Bitcoin exchanges in the country, demand overshadows supply, and the prices skyrocket.
Volume of trades
The trade volume also impacts Bitcoin prices. And these volumes fluctuate with the regulations, market size, and so on. The thing is, Bitcoin prices are calculated based on an average estimation of prior transactions. Thus, as the trade volumes vary across exchanges, the prices also vary.
No set rule
There is no set rule to price Bitcoins. Instead, it is priced entirely by market forces. As trading differs across exchanges, the prices too are different. No one knows what a Bitcoin should cost. There is no global standard. Also, as a decentralized digital currency, it is not nailed to any other currency like USD or INR. It costs as per the respective market sentiment.
Taxes & fees
Your Bitcoin comes with additional charges like transaction fees, taxes, margins etc. in addition to its core price. These charges vary from exchange to exchange. This further adds to the diverseness in Bitcoin prices across exchanges. You can check Bitcoin Price Live on trusted cryptocurrency exchanges like ZebPay.
Inefficient markets
Price differences exist because markets are inefficient. It means the price of a Bitcoin varies due to the different fees that crypto exchanges charge investors, besides the varying levels of trade volume and liquidity on any given exchange. Fluctuating prices across exchanges form an arbitrage opportunity. It implies that it is tough for traders to arbitrage differences throughout exchanges, which make these price variations linger longer than they ideally would in an efficient market.
In conclusion
Are you thinking of buying Bitcoins? Then, you should do a proper check on the prices across various exchanges. In addition to this, be sure to check the transaction fees, exchange rates, etc. and only then you should zero in on an exchange. For a smart, successful, and trustworthy crypto journey, trading on ZebPay can be a great starting point.
***
DISCLAIMER
The views, opinions and positions expressed in this article are those of the author alone and do not necessarily represent those of https://www.cryptowisser.com/ or any company or individual affiliated with https://www.cryptowisser.com/. We do not guarantee the accuracy, completeness or validity of any statements made within this article. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author. Any liability with regards to infringement of intellectual property rights also remains with them.