A cryptocurrency pair, or trading pair, is a combination of two assets that can be exchanged for each other on a trading venue, quoted as the price of one in terms of the other. In the pair BTC/USDT, for example, the price shows how many units of the stablecoin Tether are needed to buy one bitcoin. The first asset is called the base asset and the second the quote asset. Every trade on a crypto exchange takes place in a specific pair, and the same coin can trade at slightly different prices in different pairs and on different exchanges. Exchanges usually list it simply as a pair.
The idea comes from the foreign exchange market, where currencies are always traded in pairs such as EUR/USD, as explained under currency pair. Crypto pairs can combine two cryptocurrencies, a cryptocurrency and a stablecoin, or a cryptocurrency and a government-issued currency. Which pairs an exchange lists, and how much trading each attracts, affects prices, costs and opportunities for arbitrage.
Cryptocurrency pairs in plain terms
A pair is just a price tag that says what you must give up to get something. In a shop, a loaf of bread is priced in your local money. On a crypto exchange, a coin might be priced in dollars, in a dollar stablecoin, in bitcoin or in ether, and each of those price tags is a different pair.
If you want to swap one small coin for another, the exchange may not have a direct price tag for that swap. You then have to go through a middle step, for example selling the first coin for a stablecoin and using the stablecoin to buy the second. Each step costs a little, which is why the most popular pairs, with the most buyers and sellers, are usually the cheapest to trade.
Base and quote assets
In a pair written A/B, A is the base and B the quote. A price of 60,000 in BTC/USD means one bitcoin costs 60,000 US dollars. Buying the pair means buying the base and paying in the quote; selling it means the reverse. Exchanges group pairs into markets by quote asset, such as USDT markets, USDC markets, BTC markets and fiat markets. Since the late 2010s, stablecoins such as Tether and USDC have become the dominant quote assets on many exchanges, because they let traders hold a dollar-like balance without leaving the crypto system.
Cross rates and a worked example
When a direct pair does not exist or is thinly traded, its price can be derived from two other pairs that share a common asset:
- is the price of asset A in units of asset B.
- is the price of asset B in units of asset C.
- is the implied price of A in units of C.
For example, if ETH/BTC trades at 0.05 and BTC/USDT trades at 60,000, the implied ETH/USDT price is 0.05 × 60,000 = 3,000. If the ETH/USDT market actually shows 3,030, a trader could in theory buy ether through bitcoin and sell it directly for a 1% gain before costs. Such opportunities, known as triangular arbitrage, are usually small and short-lived because automated traders close them quickly, and fees and slippage often eat the difference.
Liquidity and costs
Each pair has its own order book or liquidity pool, so liquidity can vary widely between pairs for the same coin. Highly traded pairs such as BTC/USDT and ETH/USDT typically have the tightest bid-ask spreads and the deepest books. Less popular pairs may have wide spreads, making it cheaper to route a trade through two liquid pairs than through one illiquid pair. Trading volume figures published by data sites are usually summed across all pairs and exchanges, and analysts watch for wash trading, which can inflate volume in particular pairs.
Pairs on decentralized exchanges
On decentralized exchanges using automated market makers, each pair is usually a separate liquidity pool holding both assets, and anyone can create a new pair by depositing tokens. This means almost any two tokens can be paired, but many pools are tiny and easy to manipulate. Swap aggregators search across pools and chains to find the best route, often splitting an order through several pairs.
Practical considerations
Traders choosing a pair consider the quote asset's own risks, for example whether a stablecoin is likely to keep its peg, as well as liquidity and fees. Profits and losses are measured in the quote asset, so a gain in a BTC-quoted pair can still be a loss in dollar terms if bitcoin falls. Tax authorities in many countries treat crypto-to-crypto trades as disposals, so trading between pairs can create taxable events even when no regular money is involved. Delistings of pairs, which happen when exchanges drop tokens or quote assets, can strand traders in illiquid positions.