What is the Bitcoin spot price and how is it calculated?

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I was offered to buy Bitcoin for today's spot price (MtGox to be specific). So, I am wondering, what is the spot price and how is it calculated? Is there a standard tool to look it up?

Murch

Posted 2013-09-11T18:39:45.120

Reputation: 51 063

Answers

3

Just like with other commodities, there can be multiple "spot price" numbers.

With gold, for instance, there can (and usually will) be different price on the Comex exchange versus the price the at the auctions in London for local delivery there.

So when referencing the spot price, that is ambiguous until the specific market whose prices will be used are clearly defined.

Even then there is the issue of the the bid/ask spread at any point in time. Since there is no regulations defining how spot price is computed, there is ambiguity between whether the highest bid offer should be the spot price, or the lowest ask offer. Others might consider the value from last trade as being the spot price. Another approach is to find the value exactly in the middle of the bid and ask and deem that as the spot price.

BitPay uses an algorithm that attempts to be fair in determining "spot price" by using multiple exchanges:

And Coindesk provides a proprietary spot price service where "spot price" also is computed using data from multiple exchanges:

Stephen Gornick

Posted 2013-09-11T18:39:45.120

Reputation: 26 454

1

I believe on the precious metal markets, the spot price is fairly uniform because of the large amounts of money involved and arbitrage. The spot price it the average of the bid and ask of the highest valued traders (i.e., the lowest spread which may be only a few pennies). During some times of the day 3 or more major exchanges around the world are trading. If the price on one exchange is significantly higher than another, a big trader will buy on the lower exchange and simultaneously sell on the higher. Instant profit with almost no risk.

Stephen Gornick is correct. I deal with several metal brokers, some run their own exchanges, so when they quote spot they are quoting their spot, which is always higher than New York, London, or whichever major market may be open at that time. They also set their own spread rather than market makers. When Bitcoins trade in New York and Hong Kong, then spot may really be spot.

DcShank

Posted 2013-09-11T18:39:45.120

Reputation: 41

0

Spot pricing is calculated by looking at amounts and prices in the bids/offers that everyone has posted, and adding them up until they meet your what you are willing to sell/buy.

I'm not sure if that's a great explanation, but incidentally, I created an application that illustrates this a while ago: http://btc-spot-pricing.johnhenry.c9.io/

John Henry

Posted 2013-09-11T18:39:45.120

Reputation: 1 173

I'm having some issues with c9.io, so that app may not be working properly. Sorry. :/ – John Henry – 2013-09-11T22:40:37.473

-1

There is not single "spot price" for bitcoin. There are only bid and ask prices on various exchanges, for various currencies.

You have to factor in how much BTC you want to buy and then look at the order book to see what price you will pay to buy or sell.

There is a tool to view all markets for a given currency, see http://bitdango.com/currencies to view all currencies. Then pick a specific one (USD, EUR, PLN, etc) you are interested in. For example, here is the USD URL: http://bitdango.com/markets?quoteCurrencies=USD - that gives you all the bid/ask prices for Bitcoin Markets that support USD.

Paul Fryer

Posted 2013-09-11T18:39:45.120

Reputation: 129

1I downvoted, and let me explain why: First, this answer is arguably false, because there are several services that offer spot-prices for Bitcoin (e.g. see the accepted answer). Second, your answer doesn't sufficiently address the main question "What is a spot-price?", third, the linked tool provides something similar with the bid/ask prices, but doesn't show a spot-price, which is explicitly the topic of this question. – Murch – 2013-09-26T19:26:28.790

@Murch - ok, I think this is what you are looking for: http://bitdango.com/currency/BTC/rates - the "spot" price of BTC, against other currencies.

– Paul Fryer – 2013-10-21T23:31:09.733