Re:Why Bitcoin is so volatile
by leoplct on Saturday December 02, 2017 @12:18PM
(#15832863)
How do you calculate how much price will drop if X $ of Bitcoin will be sold? What's formula?
[ Parent
| on HN ]
You check the order book of the exchange, in this case gdax
But how you calculate how much % change on price based on order book? Can you give me an example?
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.