Why is there so little arbitrage / such high disparity between exchanges?

[NikolaTesla]

Current price at BTC-e: $76
Current price at Bitfloor: $96
Current price at Bitcoin-24: $84

I would think a situation like this would be a perfect opportunity to make a killing buying up coins at BTC-e and selling at them at Bitfloor, and that would naturally even out the prices. So why aren't they being naturally evened out?

I simply don't have fiat in all the exchanges but I would think someone would be rich enough to deposit a significant amount in all of them and profit from the price disparity, no?

[sStC9]

The hickup is that it takes too long for people to move fiat between the others.

[NikolaTesla]

Yeah but couldn't someone just put a whole crapload of fiat in each, and buy BTC at whichever one is lowest and send the BTC to the higher one (which doesn't take very long) and sell it there? Then wait for them to switch places (the one that was the higher one is now the lower one) and buy BTC there and send it back to the first one, and just keep doing that over and over each time the exchanges cross eachother in price?

[Qoheleth]

A scheme like that takes deep pockets.

Deep pockets are only starting to enter this game.

[sStC9]

They could. But it's easy to say now. Just a few days ago when the price was off the roof, not many thought that way. It was simply too expensive to be vial for even the richer ones.

Those who wanna do this right now are stuck in "transfering fiat to site"-process which takes anywhere from 12 hours to 3 days or so. + add some verification to that and it's 5 days. And by then, prices will have changed again (in any direction)


But I'm just a newbie. I don't even know what to do with the coins I use to trade/speculate with. Hold or sell. Bah.

[sauna]

Part of it has to do with having deep pockets the other has to do with trusting the security of the sites themselves. To effectively arbitrage you would need to hold a significant amount of cash at each exchange to be sure not to run out at any one. Having holdings at each exchange increases the chance that your holdings on at least one of the exchanges could be compromised.

If an account is compromised it takes very little time for an attacker to take all the assets or just dump them (which is what occurred at MtGox in 2011).

[NikolaTesla]

They could. But it's easy to say now. Just a few days ago when the price was off the roof, not many thought that way. It was simply too expensive to be vial for even the richer ones.

Those who wanna do this right now are stuck in "transfering fiat to site"-process which takes anywhere from 12 hours to 3 days or so. + add some verification to that and it's 5 days. And by then, prices will have changed again (in any direction)


But I'm just a newbie. I don't even know what to do with the coins I use to trade/speculate with. Hold or sell. Bah.

On Bitfloor, the bank transfer takes literally 30 minutes. You go to the bank, deposit to their account, and they credit your account 30 minutes later.

[sauna]

Look at the exchanges you listed. BTC-E has the cheapest rate, and it's by far the hardest to get money into/out of. I havent used bitcoin-24 myself, but I imagine it has similar issues.

[lemonginger]

arbitrage opportunities always an only occur for the same reason. illiquidity. There's not a ton of activity on any other exchanges.

[Elwar]

If you arbitrage all toward the best prices you could end up with a buttload of brazilian pesos in some obscure exchange. But you got the best price for them, just waiting for someone to buy sell BTC for them.

[And1]

I tried that move and transfered BTC from btc-e to cavirtex. Hoped for 20$/B profit, but before bitcoins reached cavirtex other players beat me and decreased price, plus price stone droped on mtgox. I lost 20$/B.