Post
Topic
Board Trading Discussion
Re: How do exchanges work?
by
hugeblack
on 23/01/2024, 07:44:19 UTC
My question is why is the rate higher on one exchange than on another?

Your definition of the word higher may give you a more accurate answer, as the price that appears on sites such as CMC[1] is an average price, each platform has a specific price for Bitcoin that varies every second with trading volumes, but most of these CEXs are around this average price, and the difference is usually between 1% and 2% in The best conditions are especially for Bitcoin due to its high liquidity, but you may get different prices in:

 - Buying Bitcoin from auctions: After Bitcoin is confiscated by governments, it is usually sold at a public auction. Prices are often slightly different from the price of Bitcoin according to the auction.
  - Buying from OTC: These are highly regulated markets and deals in them are worth millions or even billions of dollars.
  - Buying from P2P: Due to weak supply and demand, you may buy Bitcoin from a person or a P2P platform at a price that is different from the average price.

So, inside CEXs, the price may be different, but it is usually in the range of 1% and 2%, and liquidity may create some higher rates for some time, and outside CEXs, it may be different for above reasons.

[1] https://coinmarketcap.com/