higher volume markets having larger price swings?

[thegoatiest]

Hi.
I've been comparing the charts of coinbase and bitfinex. For BTC
It seems to me there are much larger swings in price % on bitfinex. It also seems to be more predictable.

I would've thought that with bitfinex having a larger volume being traded there would be more competition and thus less volatile price swings/action? And along that logic; with there being fewer traders on coinbase I would've expected a higher spread in price due to the smaller amount of traders deciding the price.

For instance the least volatile seems to be the coinbase btc/eur market. This is quite a small market compared to the coinbase usd/BTC


Do the markets with highest volume have a larger or smaller spread on price? For instance longer wicks on the candles e.t.c?
Thsnks

[1715051513]

1715051513

[1715051513]

1715051513

[1715051513]

1715051513

[exstasie]

Hi.
I've been comparing the charts of coinbase and bitfinex. For BTC
It seems to me there are much larger swings in price % on bitfinex. It also seems to be more predictable.

I would've thought that with bitfinex having a larger volume being traded there would be more competition and thus less volatile price swings/action? And along that logic; with there being fewer traders on coinbase I would've expected a higher spread in price due to the smaller amount of traders deciding the price.

For instance the least volatile seems to be the coinbase btc/eur market. This is quite a small market compared to the coinbase usd/BTC

Do the markets with highest volume have a larger or smaller spread on price? For instance longer wicks on the candles e.t.c?
Thsnks

Higher volume and liquidity usually means less volatility because traders experience less slippage. For example, Bitstamp has noticeably longer wicks than Coinbase.

I think Bitfinex deviates and has higher volatility because it's a margin platform with stop orders built into the UI. So we see long and short squeezes and stop runs on Bitfinex that are less severe on non-margin exchanges.

[thegoatiest]

Thanks exstasie, that explains it perfectly.

I'm thinking of migrating over to Binance. I presume their charts are pretty true to the real value of BTC; with it's high liquidity and not having margin trading?

[justdimin]

Normally it shouldn't be like that because it is easier to move smaller volume coins into bigger swings and it is harder for high volume coins to swing because of the high amount it would require to swing.

The reason why the small volume coins do not get those type of swings is that people are afraid if they get into a small volume coin they would change it to better and price would go up but it would be difficult to get their money out of there when the volume drops back and it would be hard to sell at the base price and would require them to sell it at a loss.

At the same time, the reason why high volume coins swing is that people know there are people who are interested in those coins so when a rich person buys a coin like hundreds of millions of dollar worth they will be capable of selling later on without crippling the market too much.

[rodalutor]

I think it's because it's a USD market instead of a USDT market, you get a lot more people buying in or cashing out large rather than in the USDT market you get a lot more day traders, scalpers etc.

[exstasie]

Thanks exstasie, that explains it perfectly.

I'm thinking of migrating over to Binance. I presume their charts are pretty true to the real value of BTC; with it's high liquidity and not having margin trading?

Ah, one more thing to consider. Bitfinex sometimes has banking problems. This inflates crypto prices on the exchange since people can only buy crypto to withdraw. You can see BTC is trading $120 higher on Bitfinex than the rest of the market right now. This can be another source of volatility/unpredictability. Check the price action on October 14th for example: that big spike was banking FUD.

I mention this because Binance only offers stablecoin markets for "fiat" trading, the biggest markets being USDT. USDT mirrors Bitfinex prices because Bitfinex and Tether are owned and operated by the same company. Bitfinex is the only place where Tether is redeemed at 1:1 to USD.

So that's one more thing to consider. Many traders consider the prices at true spot exchanges like Coinbase and Bitstamp to be the most reliable.