How Cryptocurrency Prices Work
A cryptocurrency is a digital asset recorded on a blockchain. Unlike company shares, most coins do not represent ownership of a business, and their price depends mostly on what people are willing to pay at a given moment.
Prices are set by trading
Prices are discovered on exchanges where buyers and sellers place orders. Because many exchanges operate at once, a coin can trade at slightly different prices in different places. Data services usually show a price from a major exchange or an average. The crypto prices on this site come from Binance's public market data.
Open all day, every day
Crypto markets do not close. Prices can move at night, on weekends and on holidays, which is one reason crypto often looks more volatile than the stock market.
Supply and demand
Many coins have a limited or scheduled supply. Bitcoin, for example, has a maximum supply built into its design. When demand rises and supply stays limited, prices tend to rise; when demand falls, prices can drop quickly.
Things that move prices
- News and regulation. Government decisions and legal rulings can change sentiment overnight.
- Adoption and technology. Network upgrades, new applications and partnerships can build or weaken confidence.
- Bitcoin's direction. Many smaller coins tend to rise and fall together with Bitcoin.
- Liquidations. Traders who borrow to trade can be forced to sell when prices move against them, which can speed up large moves. Our Live Crypto view shows recent liquidations.
- Market mood. Fear and excitement often drive short-term moves more than fundamentals.
Risk
Cryptocurrencies can lose a large part of their value in a short time and some projects fail completely. Only consider money you can afford to lose and be careful with promises of guaranteed returns.
More guides
- What Is Market Capitalization?
- How to Read a Price Chart
- What Moves Currency Exchange Rates?
- Gold, Silver, Platinum and Palladium Explained
- Understanding Stock Market Indices
Disclaimer: this article is for education only and is not investment advice. See our Terms & Disclaimer.