Why Is the Price of Bitcoin Different Across the Other Exchanges?

Bitcoin Has No Single ‘Official’ Price

Bitcoin is a decentralised digital currency (for that matter, all cryptocurrencies). It’s unregulated. This means that no central bank, government or organisation controls it. As there is no central authority setting the price, several exchanges across the world facilitate Bitcoin trading. Each of these exchanges calculates the price based on its own supply and demand. As a result, there is no single ‘official’ price. Instead, each exchange has its own market price at any given moment.

Trading Volume Affects the Price

As the exchange varies, the trading volume also varies. Large exchanges like Binance or Coinbase usually have high trading volumes and many buyers and sellers. This makes their prices more stable.

However, on smaller exchanges having lower trading volumes, even a small buy or sell order has a significant impact on the total trade percentage. This causes bigger price differences when compared with larger platforms. That is why traders often see more price variation on smaller or newer exchanges.

Liquidity Levels Vary

Liquidity means how easy it is to buy or sell Bitcoin without affecting the price. Exchanges with high liquidity, high trading volumes, traders buy or sell large amounts quickly with little change in the price. These exchanges tend to have more consistent prices.

On low-liquidity exchanges, even one large order can move the price significantly. This creates sudden price changes that make the exchange appear more expensive or cheaper than others at that moment.

Regional Demand and Local Currencies

Some exchange work is limited to a country or region. They use local currencies, such as pounds in the UK, euros in Europe or yen in Japan. If demand for Bitcoin is high in a particular region, the price on the local exchanges can rise above the global average.

Currency exchange rates also affect the final price you pay at the exchange. As currency values change continuously throughout the day, so does Bitcoin's value. The Bitcoin price shown in that currency may look slightly higher or lower compared to prices in US dollars or other currencies.

Fees and Premiums

Some exchanges include extra costs that influence the final price. These can be,

• Trading fees
• Withdrawal fees
• Deposit fees
• Regional premiums due to regulation or limited access

In countries where access to Bitcoin is limited, people may pay a ‘premium’ to get it. This makes the local price go above global levels.

Arbitrage Opportunities

Arbitrage is when traders buy any financial instrument on a cheaper exchange and sell it on a more expensive one to make a profit. The same is followed for Bitcoin as well. While this activity helps smooth out trade difference volume, it does not eliminate the differential pricing completely. Prices may still vary by a small amount, especially during times of high market activity or sudden price movements.