A cryptocurrency does not have one price. The same coin trades on dozens of exchanges at once, and each exchange shows its own price, based on its own order book and the trades that happen on it. A price site has to pick one number to show, and the way it does that decides what the number means. This guide explains how the common methods work, why the prices on different exchanges differ, and what the single figure on a site really represents.
The last trade
The simplest price is the last trade: the price at which the most recent transaction happened. It is easy to understand and it moves with every trade. Its weakness is that it can be set by a small order on a thin exchange, so a single odd trade can show a price that the wider market does not share.
Most price sites therefore do not use one exchange's last trade. They combine trades from several exchanges, and they apply rules to filter out the unreliable ones.
Averaging across exchanges
A common approach is to take the trades from a set of exchanges over a short window and average them. A volume-weighted average gives more weight to trades with larger volume, so a deep exchange counts for more than a thin one. The result is a price that reflects where most of the trading actually happened.
The choice of exchanges matters. A site that includes exchanges with inflated or unreliable volume will weight them too heavily, and its price will drift towards whatever those exchanges show. Good sites exclude exchanges that cannot be verified, and they say which exchanges they use.
Why exchanges disagree
Prices on different exchanges differ for several reasons.
Fees and withdrawals. Moving coins between exchanges costs money and takes time. If one exchange is cheaper or easier to use, its price can differ from another for a while.
Local demand. Some regions have stronger demand, and a coin can trade at a premium there. The gap can be large in markets with capital controls or limits on bank transfers.
Liquidity. On a thin exchange, a small order moves the price more, so the displayed price can be far from the rest of the market.
Timing. Trades on different exchanges happen at slightly different moments, and in a fast market a few seconds can make a visible gap.
Arbitrage. Traders buy where a coin is cheap and sell where it is dear. This closes most gaps quickly, but not always, and the cost of moving money limits how far they can close.
A worked example: a gap between exchanges
Suppose a coin trades at 100 on a deep, well-regarded exchange and at 103 on a smaller one in a market with restrictions on bank transfers. A trader could buy at 100 and sell at 103, but only if they can move money into the smaller exchange, pay the fees, and get the coins across. The 3 percent gap is real, but it is not free money. After fees, transfer costs and the time to move funds, most of it may be gone.
A price site that averages across both exchanges, weighted by volume, would show a figure close to 100, because the deep exchange dominates the volume. A site that used only the smaller exchange would show 103. Both figures are accurate for their own sources, and only the method tells you which one you are looking at.
| Exchange | Price | Volume share | Contribution to a volume-weighted average |
|---|---|---|---|
| Deep exchange | 100 | 90% | 90.0 |
| Smaller exchange | 103 | 10% | 10.3 |
| Volume-weighted average | about 100.3 |
Outliers and bad data
Every price site has to handle bad data. An exchange may show a price far from the rest because of a technical fault, a stale quote or a deliberate attempt to move the price. Good sites detect outliers, compare each source with the others, and drop sources that differ too much. Some also flag a price as unreliable when too few sources agree.
You cannot see these decisions from the number alone. Check the methodology page of the site you use, and see which exchanges and rules it applies.
Candles and history
Charts show a series of prices over time. A candle for one hour, for example, shows the open, high, low and close of the trades in that hour. The high and low come from the trades the site has, so a candle built from fewer sources can miss a spike that happened on an exchange the site does not track. The guide on crypto volume covers how much a volume figure depends on the same choices.
What a price is, and is not
A price is the last agreed value for a small amount of a coin, on the sources a site uses. It tells you what a buyer and seller agreed at that moment, on those venues. It does not tell you the value of the coin in any absolute sense, and it does not tell you what you could sell your whole holding for, because a large sale would move the price against you.
For a large position, the price you can actually get depends on the depth of the order book, the fees and the time it takes to sell. The guide on the bid-ask spread explains the same idea in stock markets, and it applies to crypto too.
Why a price can spike
A price can jump sharply on a single exchange when a large order clears a thin order book, when a listing or delisting is announced, when a fault gives a wrong quote, or when a market maker stops quoting. Price sites that use several sources and volume weighting usually absorb these spikes, but they can still show them if the spike is large or if most sources move together. When you see a sudden move, compare it with other exchanges and with the trading volume before you treat it as the market price.
Practical steps
- Use a price site that names its exchanges and its method.
- Compare the price on the exchange where you would trade, not only the average.
- Check the volume behind the price, because a figure from thin trading is less reliable.
- For a large trade, look at the order book and the depth, not the headline price.
- Remember that a gap between exchanges is often smaller after fees and transfer costs.
Common mistakes
Treating one exchange's price as the market price. It is one source among many.
Using a price from a thin exchange. A small trade can distort it.
Ignoring fees when comparing exchanges. A gap of a few percent can disappear after costs.
Assuming the average is the price you will get. Large orders move the price against you.
Key takeaways
A cryptocurrency trades on many exchanges, and each shows its own price. Price sites combine those trades, usually with volume weighting, filter unreliable sources and detect outliers. Exchanges disagree because of fees, local demand, liquidity, timing and the limits on arbitrage. The single figure on a site depends on its method, so check which exchanges it uses and how it handles bad data. For a real trade, the price you get depends on the exchange you use and the depth of its order book.
This guide is for general information, not financial advice. See the disclaimer.