How efficient is the the cryptocurrency market?

[hitchingAride]

I have a what-if scenario below and wonder what the results might be any ideas would be much appreciated thanks.



Dogecoin is priced at 0.00000055BTC on Poloniex exchange a single big buyer buys 131.515BTC worth of DOGE instantly bringing the lowest selling price up to 0.00000099BTC on Poloniex an 80% increase. Now this style of buying is not logical from the buyers perspective as it would make sense to do small orders over a longer period rather than instantly. But I wanted to make a what if scenario and am curious what might happen.  

So my question is how efficient is the cryptocurrency market?

A) would it be profitable for users shortly after the big buyers purchase to go on to exchanges such as Kraken or other exchanges and buy DOGE from there and then selling on Poloniex? (arbitrage of exchanges)

 -If arbitrage is profitable between exchanges in my hypothetical scenario how long would it likely be profitable for arbitragers before a new stable market price is set in all the exchanges?

B) Following the hypothetical 131.515BTC buy of DOGE from just a single person leaving the lowest seller at 0.00000099BTC, where do you believe the price might end up afterwards and why?

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[simon66]

If DOGE whale guy buys it up to 99sat that doesn't automatically mean you can then sell at 98sat. For that to happen other buyers need to come in behind him, put in buy orders/support that you can then sell to.

Also if it was bought to 99 then many other holders would start placing sells at 98 and 97 and they would compete for there best place in line.

If this were to happen then I'd guess the price to settle at maybe 65.

Now if DOGE is higher on polo than the other exchanges, especially by I'd say 3 sat or more, it will get arbed to polo quicker than you can blink because for one people have bots for this, and for 2 there is a lot of competition period to make some coin by doing this..

If I was doge whale dude I'd just buy DOGE up on polo a few sats higher than all the other exchanges and keep a couple BTC there and then raise it when your buys either get too covered or sells stop coming. That way all these people will arb off all other exchanges right into your buy and you will end up with a lot more DOGE at a lower price than if you just snapped the book up to 99.

Look here at how efficient these markets are..  https://www.cryptopia.co.nz/Arbitrage

Have fun finding and taking advantage of any arb opportunities before someone else does, and also notice how the prices of coins across all exchanges are the same or within the same range because arbitrage levels them and keeps them level.

If you want to try to make coin by arbing you pretty much have to have BTC on all the exchanges all the time to be fast enough because sending BTC to an exchange to arb a coin takes too much time.

[foxbitcoin]

According the definitions market efficiency causes existing prices to always incorporate and reflect all relevant information. But digital market is different. It is hard to estimate their value. The price is based on the traders's willingness. It requires them to inject capital into it actively. Otherwise the market is frozen. I think Op's case is very rare!

[enhu]

while there is discrepancy, you' have the opportunity to gain but while you keep doing it, the prices of both exchange can get closer and closer, so take advantage of it while the opportunity is there.