The rise of Cryptocurrency in India can be seen clearly as India is one of the countries with the highest number of Crypto investors. The Crypto market is still maturing, the audience needs more education and needs to be aware of the projects they are investing in and also about the exchanges through which they are investing. There are tons of Crypto exchanges in India and you must have a lot of queries such as why Indian crypto exchanges have different prices. In this article, we answer questions like why do crypto exchanges have different prices and inform you about how these exchanges work.
Why Indian Crypto Exchanges have Different Prices?
With the rise of Cryptocurrencies in India, there has been a rise of Indian crypto exchanges as well. The prices of coins differ from one platform to the other, so if you are confused about why Indian crypto exchanges have different prices, there are multiple reasons for the differences in the price of the same tokens on different platforms. We have listed below a few reasons why do crypto exchanges have different prices.
1. Liquidity on the exchanges
One of the main reasons for the differences in the prices of the coins is that different exchanges have different volumes of coins on the platform. Exchanges like Binance will have a greater volume of Bitcoin than CoinDCX and the prices of Bitcoin will be different on Binance and CoinDCX. Exchanges are the subset of the total supply of a coin. The bigger the platform the bigger the supply will be which decides the slight changes in the prices of the coins.
2. Exchanges Update their Prices on Different Time
Each exchange has its own rules for updating the prices. The differences in the prices can happen due to the differences in the updating time of the exchanges.
3. No Standard Pricing
There is no standard pricing for the coins. Cryptocurrencies are decentralized tokens which mean there is no regulation or authority regulating the supply or monitoring the pricing or even governing the whole crypto world. So, the pricing of each coin totally depends on trading because there is no established way of pricing a Crypto coin. Each exchange has a different trading volume which directly influences the prices of that coin on the exchange it is listed.
4. Fees charged by the Crypto Exchanges
Each exchange charges some fees from their users to trade on their platform. Some of the exchanges charge the fee in the form of transaction fees which will result in a different price after buying the coin. The fees charged by the exchanges are small but one should always take a look at the charged fees to have an idea about the fees that they are paying and what other exchanges are charging. This is another reason for the difference in the prices on different Crypto exchanges.
5. Trading volume
The trading volume which totally depends on the liquidity provided by the exchanges also determines the prices of a particular token on the crypto exchanges. The more people indulged in a coin on a particular exchange can affect the price of the coin may differ from other exchanges.
Now you know why Indian crypto exchanges have different prices. The crypto world is still maturing and the scams surrounding the crypto world are increasing day by day. If exchanges like FTX can fall like a house of cards then trusting other exchanges can be a bit sketchy. Only indulge with the reputed exchanges and store your coins in secured wallets.
How do Crypto Exchange work?
Crypto exchanges provide liquidity to the users to buy and sell their crypto or exchange their crypto with fiat currencies like USD. The exchanges provide liquidity and the traders buy and sell the coins through which the prices are determined. Why do crypto exchanges have different prices? The differences between the prices on different exchanges depend on the trading volume of the crypto exchanges. We don’t suggest storing your currencies in your crypto exchanges but you can also store your currencies in your exchange wallets.
There are some benefits to storing your coins on crypto exchanges. You can stake your coins which will earn you interest for lending your coin to the exchange for some time. There are some exchanges that don’t allow you to send your crypto to some other platform or to your own wallet. The crypto exchanges are available to trade 24 hours a day 7 days a week unlike the traditional exchanges which have a fixed timing in which they operate.
Also Read: Top 8 Cryptocurrency Exchanges In India
Can I Profit from Price Differences at Various Exchanges?
The chances to profit from the price differences at various exchanges are slight. That slight chance is known as an arbitrage opportunity, the buying and selling of a token to make a profit by the changes in the prices across the different platforms. This strategy is a hit-and-miss. You cannot be sure about the profit. So, how can you profit from price differences at various exchanges?
You have to buy a particular token at a lower price from an exchange and then sell it on a different exchange which has a higher price of that same token at the same time and this whole process needs to be done quickly before the prices change. Also, you have to keep in mind the fees charged by both exchanges as each exchange has different fees which can cause you the profit you are making in between those prices. The differences are tiny so you will need a large sum of money for investing to make a good amount of profit.
The Crypto market has seen some of the worst incidents in recent times which had an adverse effect on the whole crypto world. With scams and losses surrounding the crypto community, trust has started to lose in even the most reputed companies related to crypto. Crypto investors and traders need to be careful and well aware of the environment they are getting involved with. Hope we have answered your query about why Indian crypto exchanges have different prices. Stay tuned with us to learn more.