The Bitcoin price is based off the cost of one whole Bitcoin, similar to the way that shares in a
company are priced in a share market. Unlike traditional share markets, however, you may buy and sell
fractional amounts of Bitcoin. For example, if the Bitcoin market price is $12 000, you can buy 0.5
Bitcoin for $6 000. You can read more about this in the What is Bitcoin
page. The price of Bitcoin on Independent Reserve is purely based off the trading behaviours of our
customers. As explained in the How to buy Bitcoin page, Independent
Reserve is purely an open order book exchange. We do not supply Bitcoin - when you buy Bitcoin
here you are simply buying it directly off another Independent Reserve customer who is looking to sell.
The Bitcoin price will go up when there are more buyers than sellers, and the price will go down when
there are more sellers than buyers.
Arbitraging
It's important to understand that with Bitcoin and most cryptocurrencies, exchanges are not connected.
This means that on one exchange the price can conceivably be quite different to another exchange.
If the market price between two exchanges diverges enough, this presents an arbitrage opportunity,
where Bitcoin can be bought on the exchange with the lower price, transferred to the other exchange,
and then sold for a profit. This is the main mechanism that keeps prices on different exchanges in
line with each other.
Volatility
The Bitcoin price has historically been quite volatile when compared with traditional share markets.
This makes it a commodity to trade, where proportionally high gains (and losses!) can be realised
in relatively quick time periods. The below graph shows a historic view of the Bitcoin price on
Independent Reserve's order book.
Confirmation
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