The ongoing, real-time process by which market forces of supply and demand dynamically determine the fair market price of a cryptocurrency. This activity aggregates all available information and participant sentiment without interruption.
Mechanism
In cryptocurrency markets, price discovery occurs ceaselessly across numerous exchanges and decentralized protocols, driven by continuous order book submissions, executed trades, and liquidity provision. Algorithms constantly adjust bids and offers in response to incoming market data and order flow.
Methodology
High-frequency trading systems and automated market makers (AMMs) contribute significantly to continuous price discovery by facilitating constant trade execution and liquidity adjustments. Market participants leverage sophisticated models to interpret these dynamic price signals for strategic trading decisions and risk management.
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