Crypto Price Gaps: Why Platforms Show Different Prices

Why does this happen, and how can you find the best price? Scroll down to find the answers.

Reasons Why Crypto Platforms Show Different Prices

At first, price differences across platforms can seem confusing, but you’ll understand why this happens once you study how cryptocurrencies work. The gaps can vary, sometimes being small or large, depending on several factors.

On popular crypto exchanges such as Binance and WhiteBIT, the difference is usually small, typically ranging between 0.1% and 0.2%. However, these gaps can widen when prices are influenced by regional demand and geopolitical events.

Breaking down the reasons for crypto price gaps:

1. Lack of Global Standardization of Prices

Compared to money issued by central banks, cryptocurrencies are not regulated by any central authority. Therefore, there is no third party to set crypto prices on exchanges.

Apart from this, crypto exchanges operate separately, each with different amounts of users and pricing mechanisms. Non-standard price evaluation can cause price discrepancies, especially for lesser-known crypto assets.

2. Trading Volume and Liquidity 

On exchanges with high liquidity and trading volume, where lots of people are buying and selling, prices tend to be more stable and accurate. However, on smaller exchanges with less activity, even a single large trade can cause the price to swing significantly because there aren't enough trades to balance it out. 

So, if you're checking prices, it's best to stick to platforms with higher trading volumes for a clearer picture of the market.

Biggest crypto exchanges based on 24-hour trade volume on December 9, 2024. Source: statista.com

3. Transaction Fees 

Transaction fees also play a role in price differences across exchanges. Think of it this way: every exchange charges fees for trading, and these fees can vary. On some platforms, the fees might be higher, which gets factored into the price. Essentially, traders on those exchanges are willing to pay a bit more because they're factoring in the cost of doing business there.

On top of that, withdrawal fees can make arbitrage (buying on one exchange and selling on another) less profitable, which reduces the pressure to align prices between exchanges. So, even though you'd expect prices to balance out, the costs of moving funds between platforms can keep them different.

Important to know: Fees aren't always obvious upfront. You usually have to preview your order to see the full cost, including any added fees, and that total can impact the final price you end up paying.

4. Local Market Conditions

Supply and demand, along with regulations, are key factors influencing crypto prices. Since these aspects can vary across countries, so can the prices. This is particularly true in the South Korean market, where crypto is in high demand, and supply on local exchanges is often limited.

Crypto platforms based in South Korea are relatively isolated, operating mainly within the local market. This is due to government crypto regulations and capital controls, which create entry barriers for foreign investors.

As a result, crypto prices in South Korea are often higher, with rare cases of being lower compared to other countries.

This difference, known as the “Kimchi Premium“, can range from a few percent to double digits. It's worth mentioning that as of December 2024, the Kimchi Premium is at its lowest.

Another important factor to note is that cryptocurrency prices in local markets are often quoted in the local currency. Any fluctuations in the local currency's value against the US dollar can create discrepancies between local and global prices.

5. Platform Infrastructure and Price Updating Systems

The displayed prices also depend on several tech factors, including trading algorithms that match buy and sell orders, real-time price updating systems, and server infrastructure.

Some exchanges have faster and more advanced systems, so their prices update almost instantly when market conditions change. For example, if Bitcoin's price surges on one exchange, a platform with high-speed tech might match that change right away, keeping its prices closer to the global average.

On the other hand, smaller or less advanced exchanges might have delays in price updates because their systems can’t process trades or changes as quickly. This means their prices could lag behind during fast-moving markets.Another factor is how orders are handled. 

Related: Crypto exchanges order types explained

Advanced exchanges might offer features like “smart order routing,” which automatically finds the best prices across their platform.
For example, if you're trying to buy Bitcoin, the exchange may split your order across multiple sellers to get you the best deal. Simpler exchanges might not have this feature, so you could end up paying slightly more.

Lastly, during times of high traffic – like when news breaks or Bitcoin spikes- slower exchanges might struggle to keep up, leading to bigger price differences compared to larger, more reliable platforms.

How to Find the Best Crypto Price and Use Price Differences to Your Advantage 

If you want to get the best deal on crypto, you need to understand how to handle the price differences between exchanges and markets. Here’s what you can do: 

• Monitor Multiple Exchanges: Crypto prices can vary from one exchange to another due to factors like trading volume and liquidity. Use price comparison tools or platforms that track multiple exchanges to spot the best price for a coin at any given time.

• Look for Arbitrage Opportunities: This is where price differences really work in your favor. If you spot a coin cheaper on one exchange and pricier on another, buy low and sell high to pocket the difference. This can work for example by exploiting the price difference between South Korean crypto exchanges and those in other regions. However, keep in mind that transaction fees might cut profits, so factor that in before you execute any trades.

• Use Limit Orders: If you want to buy or sell at a specific price and avoid paying the current market rate, place a limit order. This gives you more control over your transactions and helps you avoid buying during price spikes or selling when prices dip.

• Track Market Trends: Crypto prices can be volatile, but by keeping an eye on long-term market trends, you can predict when prices will rise or fall. This helps you time your trades better and avoid making impulsive decisions based on short-term fluctuations.

Overall, it’s all about staying alert, spotting opportunities quickly, and making smart moves when the market shifts in your favor.

FAQ 

1. Why Do Crypto Prices Differ Across Platforms?

Prices fluctuate due to varying liquidity, trading volume, and regional demand. Each exchange operates independently, creating price disparities based on their own market conditions.

2. What Is Kimchi Premium? 

The Kimchi Premium occurs when cryptocurrencies trade at higher prices on South Korean exchanges due to strong demand and limited supply, though they can occasionally be cheaper depending on market conditions.

3. What Platforms to Trust for Accurate Pricing Information?

Reliable platforms like CoinMarketCap and CoinGecko aggregate prices from multiple exchanges and provide an average or weighted price.

Related: CoinMarketCap or CoinGecko: Which Crypto Tracker to Choose

4. How to Use the Price Differences to Your Advantage? 

Identify arbitrage opportunities by buying at a lower price on one exchange and selling at a higher price on another. Factor in fees, speed, and market timing to maximize your profits.