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A Beginner's Guide to Understanding Crypto Coin Prices

How Supply and Demand Determine Value in the Crypto and Token Market

Have you ever wondered why a Bitcoin is worth thousands of dollars, while a single DOGE coin is worth just a few cents? The concept of crypto coin price discovery can be a bit tricky to understand, but it's actually quite simple.

The key idea behind crypto coin prices is the basic law of supply and demand. Just like when you go to a café to buy a cup of coffee, the price of the coffee is determined by how many people want to buy it (demand) and how many cups the café has available to sell (supply).

In the case of crypto coins or tokens, the same principle applies. If there are more people who want to buy a particular coin (high demand) and there are only a limited number of coins available to sell (low supply), then the price of that coin will go up. On the other hand, if there are more coins available to sell than there are people who want to buy them (low demand), then the price of that coin will go down.

So, how do we know what the prices of different crypto coins are? The answer is that there is no one "single" price for any given coin. Different exchanges and websites may show slightly different prices for the same coin. This is because different exchanges have different users with different motivations, and websites that don't operate as an exchange gather their prices from multiple sources.

For example, if you look at the price of Bitcoin on different exchanges like Binance, Coinbase or HollaEx Pro, you may notice that the prices are slightly different. This is because the price of Bitcoin on an exchange is determined by the last trade that occurred on that exchange. So, if there are many trades happening on an exchange, the price of that coin will change frequently.

Another factor that can affect the prices of crypto coins on different exchanges is the activity of "arbitrage traders". These are people who take advantage of price differences on different exchanges and buy a coin on one exchange where it's cheap and sell it on another exchange where it's more expensive. By doing this, they help bring the prices of different coins on different exchanges closer together.

For example, if you look at the price of HollaEx Token (XHT) on different exchanges, you may notice that the prices are slightly different. Most of XHT's activity is on HollaEx Pro Exchange, generally, a higher trade volume indicates a more accurate price.

In conclusion, the concept of crypto coin price discovery can be a bit tricky to understand, but it's actually quite simple. The prices of crypto coins are determined by the basic law of supply and demand, and different exchanges and websites may show slightly different prices for the same coin.

Having your own crypto exchange with white-label exchange software can be a great starting point for managing your coin and beginning its price discovery process. By having a home for your coin, you can create a community and a stable ecosystem for it. White-label exchange software gives you the flexibility to customize your exchange and create your own tokenomics system, and this can help ensure the long-term success of your coin. It also gives you more control over branding and marketing, and this can help you better develop the utility and performance of your coin. With your own exchange, you can build a solid foundation and create a sustainable ecosystem for your newly minted digital asset.

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Simon Gegen

Simon Gegen

Financial cloud services and wallet solutions

Holla-Tech

Member since

23 Apr 2021

Location

Tbilisi

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This post is from a series of posts in the group:

Tokenomics

The group is focused on blockchain tokens and how they are creating new economic systems. Similar to points, gift cards, frequent flyer miles, and various forms of credits, tokens can be used to increase efficiency, bond a community, and source new revenue streams. Currently, utility tokens are some of the most interesting areas when it comes to tokens and this group will help explore ideas around this concept of Tokenomics. Find out more about Tokenomics at https://www.hollaex.com/blog/tokenomics


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