Reasons for high arbitrage levels

[cointhink]

The price/volume separation between mtgox and the other 'big' exchanges, BTC-E and Bitstamp, is at all-time high levels of around $500 total opportunity.

The graph I made/use to follow arbitrage potential is here:
https://cointhink.com/arbitrage/btcusd

The mtgox-btce difference I have always attributed to the difficulty of moving USD into BTC-E. The listed options on the BTC-E site do not inspire confidence at first look, or they do not exist. Bitinstant used to be popular for this but they stopped having available funds in BTC-E, then stopped all together (their website says they're rebuilding the service).

Bitstamp (and camp-bx) are also trading at BTC-E levels, which is a full 9% less than mtgox. I want to ask here if there are theories as to the source of this price gap.

Thanks,
Don @ CoinThink.com
ps. The 'total opportunity' is a calculation of the actual ask/bid skews between markets *including volume* to get a genuine total amount of opportunity of asks that are lower than bids.

[solex]

"Fiat Friction"

Bitcoin is the superman of currencies and can fly around the world at will.  Filthy festering flimsy fiat is a dead horse in comparison.

Check out the variance between BTC/LTC on btce and bter. Close to zero at present!

http://bter.com/trade/ltc_btc             0.031
https://btc-e.com/exchange/ltc_btc    0.031

[pedrog]

There ain't no such thing as a free lunch.

[suryc]

The reason bitcoin price is higher on Gox is because you cannot actually withdraw the fiat balances. The forums are full of people that have been trying to withdraw fiat from gox since may.

This problem has caused an artificial inflation in the price at Gox to be about 10% higher than bitstamp.

If it was possible to withdraw fiat from Gox, then an arbitrage opportunity would exist:
  1. Wire fiat to bitstamp and buy bitcoins with it
  2. Sell those bitcoins immediately on Gox at a 10% premium
  3. Withdraw fiat from Gox
  4. Repeat from step 1

If this was possible, all of the btc exchanges would quickly reach an equilibrium in price that might be +/-1% because of fees.
Alas, mtGox is not a real exchange and you cannot make a withdrawal, so the process fails at step 3.

Anyway, my point is there is no arbitrage opportunity, but there is a serious problem with mtGox.

[troner]

Anyway, my point is there is no arbitrage opportunity, but there is a serious problem with mtGox.

+1

I has been discussed somewhere else but anyway: maybe MtGox price is above "normal" (let's say an average from other exchanges) price because of low BTC supply. It's possible people are buying BTC just to move funds out of MtGox since it is now the only reliable way how to do it... If this is the case, it can trigger greater panic buying I think.

And one more point: If all above was true, we should not value Bitcoin according to MtGox charts anymore.