4 ms·

How do you calculate how much price will drop if X $ of Bitcoin will be sold? What's formula?

• rejschaap 9y ago
  You check the order book of the exchange, in this case gdax
  • leoplct 9y ago
    But how you calculate how much % change on price based on order book? Can you give me an example?
    • rejschaap 9y ago
      Basically you simulate the sale based on the order book. Let’s say the order book contains the following bids ordered by price: Person A wants to buy 10 coins for 100 dollar Person B wants to buy 4 coins for 97 dollar Person C wants to buy 3 coins for 96 dollar etc Now someone wants to sell 12 coins, he will sell 10 coins to person A and 2 coins to person B. The order book will now look like this: Person B wants to buy 2 coins for 97 dollar Person C wants to buy 3 coins for 96 dollar etc Before dumping the 12 coins you could sell a coin for 100 dollar, after dumping you can sell a coin for 97 dollar. You could say the price has dropped 3%. Obviously this is a very naive calculation, but it should give you the basic idea.