Why is btc arbitrage disappearing? (Exchange price differences narrowing)

[sarahb]

Mt. Gox withdrawals seem to be taking as long as ever.  Why are prices there no longer 10-15% higher than the rest of the exchanges (bitstamp, btc-e, etc.)?

[cassimares]

Mt. Gox withdrawals seem to be taking as long as ever.  Why are prices there no longer 10-15% higher than the rest of the exchanges (bitstamp, btc-e, etc.)?

Someone in japan figured the arbitrage and has being doing it massively... FYI you can withdraw Mt Gox to a Japan bank easily....

[sarahb]

Mt. Gox prices used to be 10-15% higher to compensate for the risk that you wouldn't get your money out, and for the time it would take to get your USD out.  Since withdrawals are taking as long as ever, I am wondering why this risk and time premium is no longer being paid.

[sarahb]

Cassimares, is that a guess or do you have some data that someone in japan is doing it?  e.g., volume there has gone up dramatically.  If you have a Japanese bank account, can you withdraw USD as well?  Or only JPY? 

[keysersozeTx]

What kind of question is that? Obviously arbitrage in an electronic and border-less currency shouldn't exist and the more established it gets the less arbitrage will be possible. Hopefully it will be absolutely zero in a few weeks/months.

[jerrybusey]

I don't know what the securities regulations and laws are like in Japan in general or with regards to bitcoin but I would expect that MtGox would be engaged in some proprietary trading if legally possible. There's no reason for them to leave money on the table in terms of arbitrage opportunities if they can avoid it.

[sarahb]

Thanks jerrybusey that makes sense.  I'm just curious what happened and why there is no longer a big price premium on selling on an illiquid exchange.  I'd imagine if mtgox was doing it, they would also have to factor in that there would be less motivation for ppl to sell their bitcoins there if they are no longer going to get a premium to compensate for the additional risk of default and illiquidity.

[irpirate]

They shouldn't have been that different in the first place