Most of the exchanges I see online for Crypto and Bitcoin are run by a couple of guys only.
Let's say a lot of people buy Bitcoin when its at a low price, then it spikes up high and starts to drop again...and now everybody wants to sell it before it drops back to the exchange, how can the exchange afford to pay all these people double or triple the price of what they sold them the coins for?
I don't get it.
In this sense the majority of exchanges are providing the service of matchmaking buyers and sellers. So the exchange isn't outlaying any funds for the purchasing and selling of coins, the risk is with the traders.
Naturally they take their cut per trade (usually), and a slice for getting coins and funds into and out of the exchange, some of which is actually a fee for transmission. I tell you what, exchanges make an absolute killing in times of panic, dat volume.