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Author Topic: Question re. arbitrage between Bitstamp & Mt.Gox  (Read 462 times)
bootytoots
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April 21, 2013, 10:31:35 PM
 #1

Hi folks,

I see that the bitcoin price on Bitstamp is pretty consistently about two dollars lower than on Mt.Gox.

I guess there must be something I don't understand, since this price difference would seem to make it possible to make money just by buying bitcoins on Bitstamp, transferring them to Mt.Gox, and selling them there. Even taking the brokerage fees on both ends into account, one would still come out ahead by doing this.

If anyone knows, could someone explain what I'm not understanding?

Thanks.
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fwho
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April 21, 2013, 10:34:30 PM
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Gox ($123.5) : BTC-e ($112)
But once you sell at Gox your looking at x days until the money gets back to your bank, and x days until you can put it back into Bitcoins.
Francesco
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April 21, 2013, 10:43:19 PM
 #3

Gox ($123.5) : BTC-e ($112)
But once you sell at Gox your looking at x days until the money gets back to your bank, and x days until you can put it back into Bitcoins.

We need an easy way to transfer fiat between exchanges.

Ripple? Smiley
bootytoots
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April 21, 2013, 10:45:05 PM
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Thanks, fwho.

Even with the delay, it seems strange that this disparity in price can exist. With that price difference, if you were to buy bitcoins from BTC-e and then sell them on Mt.Gox, even with fees you'd still make about a 9.5% profit.

So what seems strange is that enough people aren't taking advantage of it to eliminate the disparity.
OdinHephaestus
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April 21, 2013, 10:51:23 PM
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Thanks, fwho.

Even with the delay, it seems strange that this disparity in price can exist. With that price difference, if you were to buy bitcoins from BTC-e and then sell them on Mt.Gox, even with fees you'd still make about a 9.5% profit.

So what seems strange is that enough people aren't taking advantage of it to eliminate the disparity.

Some of us are Wink But not with BTC-e.  For this to work, you need to buy form BTC-e, and it's damn near impossible to get USD to BTC-e without paying fees that make it not worth it.

Bitcoin: 1odinQ5YUdbfuopNF2D1FZRN8qcrC4y1L
Litecoin: LeodinXzG7CgHqPDZxaUgsDKUKBUu46qa5
nbartlett
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April 21, 2013, 10:56:44 PM
 #6

Because the quoted prices are not the prices you'll end up paying. Neither Bitstamp nor MtGox are deep or liquid enough to immediately execute trades at large volumes... and you'll need large volumes if you want to overcome the friction of transfer fees and so on.

True arbitrage is risk-free. Ideally when a price gap opens up, you would create two equal-but-opposite orders at the same time on each exchange (to support this you would need to maintain balances in both BTC and USD on both exchanges). However it's likely one side will fail to execute, or only be partially filled, leaving you with a nonzero position, and therefore exposed to risk.
bootytoots
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April 23, 2013, 09:05:50 PM
 #7

Thanks to all for your information.
Wapaca
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April 23, 2013, 09:27:59 PM
 #8

I have thought about doing this too but tough to do it efficently.  But sometimes the price difference can be up to 5% which is significant.  I buy on bitstamp and hope the price doesn't drop too quickly when I send the btc to mtgox and sell it.  So it works but very slow.
zonkism
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April 23, 2013, 09:42:41 PM
 #9

The problem you are going to run into trying to arb between any 2 exchanges is you will at some point run out of fiat on one of the exchanges and will have to wait several days to replenish... That said, you can still make some good coin/fiat doing arbs, just expect with higher prices to be waiting a long time in between arb trades...
Idaho
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April 23, 2013, 09:47:52 PM
 #10

I think you'd need to have a fair amount of money and btc in a few exchanges in order to make it worthwhile.
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