Bitcoin Forum

Economy => Economics => Topic started by: cafucafucafu on September 01, 2014, 04:14:44 PM



Title: Why are the exchanges so intertwined?
Post by: cafucafucafu on September 01, 2014, 04:14:44 PM
If the price changes on an exchange then the change is seen very quickly on other exchanges? Why is this? Do the exchanges ensure this or the users? Or is it bots which access many exchanges at once?

I can't see users reacting so quickly to a price changes and actually implementing those changes on other exchanges.


Title: Re: Why are the exchanges so intertwined?
Post by: BitCoinNutJob on September 01, 2014, 04:15:56 PM
arbitrage - people make profit via the different exchange spreads, bigger gap = bigger profit so gaps close quick.


Title: Re: Why are the exchanges so intertwined?
Post by: cafucafucafu on September 01, 2014, 04:21:20 PM
arbitrage - people make profit via the different exchange spreads, bigger gap = bigger profit so gaps close quick.

It takes long to transfer BTC. These changes happen very quickly so it can't be arbitrage . Sometimes there is always a gap in prices. E.g. There was a time when Bitfinex was always higher than Bitstamp by a few dollars. If arbitrage was the answer then why that gap?


Title: Re: Why are the exchanges so intertwined?
Post by: DannyHamilton on September 01, 2014, 04:41:49 PM
This is how open and free markets work.

If you have bitcoins to sell, where are you going to sell them?  Will you choose to sell them at the exchange that is paying you the most for your bitcoins, or the exchange that is paying you the least?  Clearly, anyone with a financial incentive is going to choose to sell at the exchange that will get them the most.  This increases the supply at that exchange.

The result of an increased supply without an equivalent increase in demand is a falling exchange rate.

If you want to buy bitcoins, where are you going to buy them?  Will you choose to buy them at the exchange that is getting you to most bitcoins for your money, or the exchange that is getting you the least bitcoins?  Clearly anyone with a financial incentive is going to choose to buy at the exchange that will get them the most.  This increases the demand at that exchange.

The result of  an increased demand without an equivalent increase in supply is a rising exchange rate.

Eventually the exchange rates reach an equilibrium where the costs and conveniences associated with each exchange determine how much higher or lower they all are from each other.  Occasionally, due to variations in the volume of transactions, the exchanges may drift apart a bit in exchange rate, but eventually market forces bring them back in line with each other.


Title: Re: Why are the exchanges so intertwined?
Post by: arbitrage001 on September 01, 2014, 04:48:42 PM
arbitrage - people make profit via the different exchange spreads, bigger gap = bigger profit so gaps close quick.

It takes long to transfer BTC. These changes happen very quickly so it can't be arbitrage . Sometimes there is always a gap in prices. E.g. There was a time when Bitfinex was always higher than Bitstamp by a few dollars. If arbitrage was the answer then why that gap?

If the exchange with higher price allow shorting btc, you can buy on exchange with lower price and then simultaneously short the same amount to lock in the price.

Then transfer the btc from exchange with lower price and close the entire position after bitcoin arrived.


Title: Re: Why are the exchanges so intertwined?
Post by: Bit_Happy on September 01, 2014, 04:49:29 PM
arbitrage - people make profit via the different exchange spreads, bigger gap = bigger profit so gaps close quick.

It takes long to transfer BTC. These changes happen very quickly so it can't be arbitrage ....

Yes it can be can arbitrage:
Someone with deep enough pockets (and a tolerance for risk) can have a good sized amount of BTC and cash on several different exchanges. That way you do not always have to wait for the BTC to transfer, and (in this case) none of the exchanges need to allow 'going short' on BTC.


Title: Re: Why are the exchanges so intertwined?
Post by: BIGbangTheory on September 01, 2014, 04:51:23 PM
arbitrage - people make profit via the different exchange spreads, bigger gap = bigger profit so gaps close quick.

It takes long to transfer BTC. These changes happen very quickly so it can't be arbitrage . Sometimes there is always a gap in prices. E.g. There was a time when Bitfinex was always higher than Bitstamp by a few dollars. If arbitrage was the answer then why that gap?
If someone already has both fiat and BTC at two exchanges then they can potentially buy BTC on one exchange and sell it on another without needing to transfer bitcoin from exchange to exchange. 


Title: Re: Why are the exchanges so intertwined?
Post by: franky1 on September 01, 2014, 04:56:42 PM
arbitrage - people make profit via the different exchange spreads, bigger gap = bigger profit so gaps close quick.

arbittrage is only 10% at play.. its more 90% sheeple panic

as proven by the china spike, where trying to move american dollar to chinese exchanges and chinese yuan to american exchanges is not a fast process..

and also proven by the mtgox saga, where mtgox closed its banks and was crashing below the $650 price of other exchanges in spring 2014 (down to $100) and other exchanges began following it down. (well untill a group of people were literally copying and pasting in all trollchats and irc's to 'wake up and not follow gox as its separate and closed off')


Title: Re: Why are the exchanges so intertwined?
Post by: Pente on September 01, 2014, 05:05:51 PM
arbitrage - people make profit via the different exchange spreads, bigger gap = bigger profit so gaps close quick.

It takes long to transfer BTC. These changes happen very quickly so it can't be arbitrage . Sometimes there is always a gap in prices. E.g. There was a time when Bitfinex was always higher than Bitstamp by a few dollars. If arbitrage was the answer then why that gap?
If someone already has both fiat and BTC at two exchanges then they can potentially buy BTC on one exchange and sell it on another without needing to transfer bitcoin from exchange to exchange. 

And that is how it is done!


Title: Re: Why are the exchanges so intertwined?
Post by: BTCulture on September 01, 2014, 06:20:21 PM
Just simple supply and demand.


Title: Re: Why are the exchanges so intertwined?
Post by: franky1 on September 01, 2014, 08:00:32 PM
Just simple supply and demand.

thats so high school level education...

you migt aswell also say that sex is just about a penis entering th vagina.. just liek they teach in high school..

what you forget is the psychology part
bitcoin: greed, smart investment, belief to safeguard against fiat failure
sex: attraction, desire, lust, love

you forget about the usefulness part
bitoin: faster than wire transfer, irreversible, deflationary, rare
sex: fun, procreation, help hormone control

sex is not simply about boy demand a girls vagina. and girl supplies it..
bitcoin is not simply about investor demands coin. and miners supplies it..

i truly hate sheeple that only graze on the green grass provided to them and not try to dig their own paths into different fields of input to ingest


Title: Re: Why are the exchanges so intertwined?
Post by: Bit_Happy on September 01, 2014, 08:10:56 PM
Just simple supply and demand.

thats so high school level education...

you migt aswell also say that sex is just about a penis entering th vagina.. just liek they teach in high school..

what you forget is the psychology part
bitcoin: greed, smart investment, belief to safeguard against fiat failure
sex: attraction, desire, lust, love

you forget about the usefulness part
bitoin: faster than wire transfer, irreversible, deflationary, rare
sex: fun, procreation, help hormone control

sex is not simply about boy demand a girls vagina. and girl supplies it..
bitcoin is not simply about investor demands coin. and miners supplies it..

i truly hate sheeple that only graze on the green grass provided to them and not try to dig their own paths into different fields of input to ingest

Just simply Greed and Fear combined with supply and demand.  :D
Seriously, at the core, some things really are that clear and easy.


Title: Re: Why are the exchanges so intertwined?
Post by: HarHarHar9965 on September 01, 2014, 08:19:03 PM
Users of exchanges will anticipate arbitrage. So if price changes a lot on one exchange, traders on other exchanges will move in that direction.

This is my position -- I don't think it's really arbitrage that does it in most cases. As fast as bitcoin moves, it's still not fast enough. So traders are filling the gap.

More than anything, western exchanges follow moves on Chinese exchanges, expecting them to be followed across the market.


Title: Re: Why are the exchanges so intertwined?
Post by: RobertDJ on September 01, 2014, 08:29:54 PM
I would disagree that the exchanges are intertwined. Their prices all move together, but they do little/no business with each-other. If one exchange were to close down for whatever reason, the other exchanges would not be affected (other then the potential for increased business).


Title: Re: Why are the exchanges so intertwined?
Post by: cafucafucafu on September 01, 2014, 11:21:31 PM
Users of exchanges will anticipate arbitrage. So if price changes a lot on one exchange, traders on other exchanges will move in that direction.

This is my position -- I don't think it's really arbitrage that does it in most cases. As fast as bitcoin moves, it's still not fast enough. So traders are filling the gap.

More than anything, western exchanges follow moves on Chinese exchanges, expecting them to be followed across the market.

Its amazing how a dip on a western exchange with little volume affects the big chinese exchanges!!


Title: Re: Why are the exchanges so intertwined?
Post by: titulng on September 02, 2014, 05:35:21 AM
Because many people doing arb


Title: Re: Why are the exchanges so intertwined?
Post by: waterpile on September 02, 2014, 07:42:10 AM
I would disagree that the exchanges are intertwined. Their prices all move together, but they do little/no business with each-other. If one exchange were to close down for whatever reason, the other exchanges would not be affected (other then the potential for increased business).

I don't think so. try to buy big orders and compare the prices to another exchanger and you will see that they don't all move together


Title: Re: Why are the exchanges so intertwined?
Post by: wasserman99 on September 04, 2014, 06:52:02 AM
I would disagree that the exchanges are intertwined. Their prices all move together, but they do little/no business with each-other. If one exchange were to close down for whatever reason, the other exchanges would not be affected (other then the potential for increased business).

I don't think so. try to buy big orders and compare the prices to another exchanger and you will see that they don't all move together
The prices do move together but this is not because the exchanges are in any way connected. It is because when the price on one exchange moves, people will attempt to use arbitrage to exploit minor differences in the prices between exchanges. So for example if the price declined on exchange A someone would sell bitcoin on exchange B (which has bitcoin trading at higher levels) and buy an equal amount on exchange A


Title: Re: Why are the exchanges so intertwined?
Post by: yunkie on September 04, 2014, 03:34:41 PM
What do you mean intervened? crypto exchanges are 100% free, wild wild west.


Title: Re: Why are the exchanges so intertwined?
Post by: BitcoinBadger on September 04, 2014, 03:45:03 PM
If the price changes on an exchange then the change is seen very quickly on other exchanges? Why is this? Do the exchanges ensure this or the users? Or is it bots which access many exchanges at once?

I can't see users reacting so quickly to a price changes and actually implementing those changes on other exchanges.
I guess the bots do it.Nowadays any forex traders have jumped onto bitcoin trading.


Title: Re: Why are the exchanges so intertwined?
Post by: obocaman on September 04, 2014, 05:47:32 PM
What the hell is intertwined?  ;D


Title: Re: Why are the exchanges so intertwined?
Post by: counter on September 05, 2014, 04:08:55 AM
Yea people are always watching the price in hopes of taking advantage of these kinds of situations.  I've been around at the right time myself and have been amazed by how fast the price will fluctuate from exchange to exchange.  Now you know to move fast when the opportunity arises.   Also don't forget that the chat boxes of full of people talking about how to make money so one post could alert many people if there is a difference in price from exchange to exchange.


Title: Re: Why are the exchanges so intertwined?
Post by: flyingcatt on September 05, 2014, 06:15:28 PM
They are not intervened, whales moving prices isnt "intervened."


Title: Re: Why are the exchanges so intertwined?
Post by: pikabit on September 05, 2014, 10:09:47 PM
They are not, do you know its the real free market? fiat is intervened, not crypto markets.


Title: Re: Why are the exchanges so intertwined?
Post by: LMGTFY on September 07, 2014, 12:07:02 PM
What the hell is intertwined?  ;D

A word other posters are confusing with "intervened" ;)

"Intertwined" is connected together (possibly loosely) - think of several lengths of twine (string, thin cord, yarn, etc) jumbled up, and then pulling on the end of one piece - it'll make the other pieces of twine move too. It's quite a good analogy for the loose coupling between exchanges, IMO.


Title: Re: Why are the exchanges so intertwined?
Post by: lihuajkl on September 07, 2014, 01:41:35 PM
the market force (supply and demand)makes them interwind, which means their price move the same direction at the limited range. otherwise like MtGox, its price departed too much from the market average price and monopolies the price, and ended up going to bankruptcy.


Title: Re: Why are the exchanges so intertwined?
Post by: TinaK on November 11, 2014, 01:54:30 AM
The Bitcoin world is linked, if there won't fall the price like others, it would lost much.


Title: Re: Why are the exchanges so intertwined?
Post by: cutesakura on November 11, 2014, 08:32:26 PM
in the stock market a great deal going on exchange value of the currency is going very fast, we must be cautious in predicting whether the value of a currency will rise or fall, rise or fall of a currency depends on how many requests to sell or buy the currency, the more traders buy a currency, the value of the currency will be getting up, and when more and more the trader sells a currency, the value of the currency will fall ...  8)


Title: Re: Why are the exchanges so intertwined?
Post by: pattu1 on November 12, 2014, 05:03:18 PM
If the price changes on an exchange then the change is seen very quickly on other exchanges? Why is this? Do the exchanges ensure this or the users? Or is it bots which access many exchanges at once?

I can't see users reacting so quickly to a price changes and actually implementing those changes on other exchanges.

If there is arbitrage, people or bots are going to quickly make use of it.
This results in price stabilization across exchanges.


Title: Re: Why are the exchanges so intertwined?
Post by: BootstrapCoinDev on November 12, 2014, 05:39:53 PM
Yep, transfer fiat to bitstamp, and btc to bitfenix, buy at 400 on bitstamp, get btc out of bitstamp, and simultaneously sell btc at 409 on bitfenix, rinse and repeat. at times get btc out of bitstamp and send them to bitfenix, get the fiat out of bitfenix and send to bitstamp. these are all the needed steps for a roundtrip. you have utilized the spread of 10% only once, but for more than one of the steps you have to pay a percentage on the full amount.


Title: Re: Why are the exchanges so intertwined?
Post by: RobertDJ on November 13, 2014, 04:08:56 AM
If the price changes on an exchange then the change is seen very quickly on other exchanges? Why is this? Do the exchanges ensure this or the users? Or is it bots which access many exchanges at once?

I can't see users reacting so quickly to a price changes and actually implementing those changes on other exchanges.

If there is arbitrage, people or bots are going to quickly make use of it.
This results in price stabilization across exchanges.
This is exactly correct. It is not that the various exchange are connected to eachother, it is that market participants are going to "correct" the prices on the different exchanges if one price differs from other exchanges too much, provided that the exchange can be sufficiently trusted


Title: Re: Why are the exchanges so intertwined?
Post by: arbitrage001 on November 13, 2014, 04:12:55 PM
Yep, transfer fiat to bitstamp, and btc to bitfenix, buy at 400 on bitstamp, get btc out of bitstamp, and simultaneously sell btc at 409 on bitfenix, rinse and repeat. at times get btc out of bitstamp and send them to bitfenix, get the fiat out of bitfenix and send to bitstamp. these are all the needed steps for a roundtrip. you have utilized the spread of 10% only once, but for more than one of the steps you have to pay a percentage on the full amount.

Low level technique.

There are some other high level arbitrage techniques that doesn't involve moving fiat and hence raise some pretty bad red flag with your local bank.