Why are there sometimes big difference between spot trading and futures?

[Synchronice]

I know centralized exchanges aren't favorable choices but compared to other ones, I prefer to use Binance.
So, Skale Network (SKL) become an interesting coin for me recently. I usually bet on futures when I want 2x or higher leverage. I was looking at charts and SKL price on Binance Spot trading was 0.069 while the price of exact coin on USD-M futures was 0.06 USDT. Usually, prices are almost identical when I look at both chart but this time it wasn't different. I talk the situation that happened 2 days ago. Date: 2023-02-10 19:00 UTC. The price didn't increase during that day on Futures.
Anyone knows what's the reason behind it? I'm not too much experienced in trading. Why was there a 15% difference in prices on the same exchange between spot and futures?

And another question:
At the same time, coinbase had way better rates than Binance. Is it legal to buy tons of coins on Binance, withdraw, deposit on Coinbase and immediately sell the coins, then buy USDT and withdraw on Binance again?

[1714806495]

1714806495

[Oshosondy]

I do not really understand your question, but let answer it this way and see if I answered it correctly:

Spot price is not the same as future contract price. Spot price is the actual price of a coin but the future price is derived. You can see the spot price higher at time, while you can see it lower at times. Funding rate is what is used to make spot price and future price not to diverge from each other during volatile market.

If the market is very volatile for a coin and it favours the bulls, you will see the future price most likely get to the spot price and later become higher. If the market is very volatile for a coin and it favours the bears, you will see the future price get lower than the spot price. In normal condition of less volatility, the future price is more always lower than the spot price which makes the funding rate more always positive.

You can experience this in a very volatile market.

At the same time, coinbase had way better rates than Binance. Is it legal to buy tons of coins on Binance, withdraw, deposit on Coinbase and immediately sell the coins, then buy USDT and withdraw on Binance again?

That is called arbitrage trading. Some traders make use of arbitrage trading to make money, but high amount of money is required to make good profit.

[tranthidung]

Why was there a 15% difference in prices on the same exchange between spot and futures?

Spot and future tradings are different areas and with different trading liquidity, trading volume as well distributions of Buy / Sell positions, Long / Short positions. Therefore, there are different slippages and cascade effects when the market moves harsh.

At the same time, coinbase had way better rates than Binance.

Sometimes it is better, sometimes it is worse. Nothing is always the same in cryptocurrency market.

Is it legal to buy tons of coins on Binance, withdraw, deposit on Coinbase and immediately sell the coins, then buy USDT and withdraw on Binance again?

It is called as Arbitrage and you can do it if you can complete withdrawal from one exchange to another exchange quick enough to take advantage of the differences. It is related to block time of a blockchain on which you move your cryptocurrency as well as speed of withdrawal processing and required confirmations for deposit before you can trade.

• Arbitrage: How arbitraging works in investing, with examples

[Peanutswar]

In spot trading, you are aiming for the long-term price movement of the crypto so you can immediately make an out for your position if you want for a long-term goal, in futures trading every price action of the market you need to predict and catch up by that you can earn those in just a short time. Just the difference is with the timelines. Theres alot of exchange right there so you can exchange your coins but the most suitable is always make sure you have fully authority with your assets.

[crzy]

And another question:
At the same time, coinbase had way better rates than Binance. Is it legal to buy tons of coins on Binance, withdraw, deposit on Coinbase and immediately sell the coins, then buy USDT and withdraw on Binance again?

Probably because of the demand and supply since the every site have their own volume and that affects the rate and value on that exchange. If you look at the coinmarketcap, you'll see every coin their have their own different value on every exchanges and that is because of the trading volume. If you are planning to take advantage of the rate, you'd better to consider the fees first before doing that and see if its worth it or not, it's legal of course as long as you have your KYC you can be good.

[jeraldskie11]

Why was there a 15% difference in prices on the same exchange between spot and futures?

I think not all coins has 15% difference in prices. Usually coins that doesn't have enough trading volume or lower volume, which are very volatile are the coins has a bigger difference. There also small differences in spot between exchanges because of trading volume.

And another question:
At the same time, coinbase had way better rates than Binance. Is it legal to buy tons of coins on Binance, withdraw, deposit on Coinbase and immediately sell the coins, then buy USDT and withdraw on Binance again?

For me, it's legal. Just be careful not to use many withdrawal address because I experienced that they locked the coins that I wanted to withdraw.

[pawanjain]

I know centralized exchanges aren't favorable choices but compared to other ones, I prefer to use Binance.
So, Skale Network (SKL) become an interesting coin for me recently. I usually bet on futures when I want 2x or higher leverage. I was looking at charts and SKL price on Binance Spot trading was 0.069 while the price of exact coin on USD-M futures was 0.06 USDT. Usually, prices are almost identical when I look at both chart but this time it wasn't different. I talk the situation that happened 2 days ago. Date: 2023-02-10 19:00 UTC. The price didn't increase during that day on Futures.
Anyone knows what's the reason behind it? I'm not too much experienced in trading. Why was there a 15% difference in prices on the same exchange between spot and futures?

Spot and futures market are different from each other. Both have their own set of traders placing orders.
So it's quite possible that both the markets have different prices

And another question:
At the same time, coinbase had way better rates than Binance. Is it legal to buy tons of coins on Binance, withdraw, deposit on Coinbase and immediately sell the coins, then buy USDT and withdraw on Binance again?

That is what called as Arbitraging. While it is possible to do it with spot trading, it cannot be done with futures trading.
Earlier people used to get a lot of arbitraging opportunities but these days the opportunities are very low.
Even if you find such an opportunity, the moment you buy and withdraw from one site and deposit on other site the price will become identical again.
The time gap between buying and then depositing makes it enough for other traders to match the current price.

[Oshosondy]

In spot trading, you are aiming for the long-term price movement of the crypto so you can immediately make an out for your position if you want for a long-term goal, in futures trading every price action of the market you need to predict and catch up by that you can earn those in just a short time. Just the difference is with the timelines. Theres alot of exchange right there so you can exchange your coins but the most suitable is always make sure you have fully authority with your assets.

With spot trading, you can withdraw to a noncustodial wallet, but with future trading, that is difficult to do.

Some people go for long term leverage like quarterly while some people even open perpetual of strong assets like bitcoin for long term, using low leverage like 2x.

But I understand you, it is good to look at the short term side if you trade future, especially while trading those altcoins, which can be delisted at any time.

[EarnOnVictor]

Anyone knows what's the reason behind it? I'm not too much experienced in trading. Why was there a 15% difference in prices on the same exchange between spot and futures?

I'm glad you added that you are not so experienced in trading, which was why you might encounter some issues you don't understand like this. Well, in my experience with Binance, their spot and future prices are almost always the same. The difference is so negligible to be considered varied. It might be an internet/technical problem. But if the issue persists, contact their support representative because I don't experience such in my account.

At the same time, coinbase had way better rates than Binance. Is it legal to buy tons of coins on Binance, withdraw, deposit on Coinbase and immediately sell the coins, then buy USDT and withdraw on Binance again?

What you want to do is purely legal but to what gain? My dear, this will not favour you, just stick to the price of the different exchanges as you see them. It will not be worth it, they are almost the same, it's you that believes they are not since you are seeing different prices, but are negligible. It's when you do the conversion and withdrawal that you will know you lose.

[Synchronice]

Spot price is not the same as future contract price. Spot price is the actual price of a coin but the future price is derived. You can see the spot price higher at time, while you can see it lower at times. Funding rate is what is used to make spot price and future price not to diverge from each other during volatile market.

Yes, I know but almost every time, prices are nearly identical. Also, a huge price boost made SKL Coin among top coins on Binance chart and it was number one in Gainers section. Its trading volume was significantly increased too. So, the question was, how did the coin that's hot in charts on Binance and is number one gainer on Binance Futures section, managed to maintain such a high difference between Spot and Futures trading?
I find it kinda confusing, my doubt here is that, is this done manually by Binance to liquidate users money to benefit themselves?


I know what's arbitrage trading but my main point here is whether it's legal to do or not. For example, if I do it with big money, will it turn a red alarm on Binance and Coinbase? Will they consider my actions suspicious and block my account? I want to get answer from those who have actually tried it and are confident in their response.

[beerlover]

n my experience with Binance, their spot and future prices are almost always the same. The difference is so negligible to be considered varied. It might be an internet/technical problem. But if the issue persists, contact their support representative because I don't experience such in my account.

Experienced or not, issues can still occur for the both of them but inexperienced traders only has a lot of questions in mind. Maybe you are right that the price difference is related to internet issues. It could be that his connection is only slow and the price dont update quickly. Or maybe it was just normal scenario since both of them are not the same types, I mean one is spot trading and the other is futures trading.

What you want to do is purely legal but to what gain? My dear, this will not favour you, just stick to the price of the different exchanges as you see them. It will not be worth it, they are almost the same, it's you that believes they are not since you are seeing different prices, but are negligible. It's when you do the conversion and withdrawal that you will know you lose.

I think this tactic is called arbitrage. It can be profitable if done right but is risky if done wrong due to how volatile this market are. Arbitrage is legal in crypto trading but only illegal on sports betting. All of us aren't the same. You think it's not worth it for you but who knows, it might work for him? Sometimes it also has to do with our luck and not just with the knowledge alone.

[pixie85]

With spot trading, you can withdraw to a noncustodial wallet, but with future trading, that is difficult to do.

Because futures trading is a scam. You're doing virtual trading where your gain or loss depends on the index, not the real price of a coin and you don't own the coin at any moment.

We could say that in spot trading you also don't own it because the exchange has it on its wallet, but with futures it's possible to never have it and still lose money. You buy a contract with fiat money and when the contract ends you get fiat or lose fiat but you never own the coin. That's why the SEC doesn't want to allow a spot futures ETF because they want to keep the scam manipulation going.

Futures prices are so disconnected from reality because they aren't real. Stay away from it.

[blockman]

I know what's arbitrage trading but my main point here is whether it's legal to do or not. For example, if I do it with big money, will it turn a red alarm on Binance and Coinbase? Will they consider my actions suspicious and block my account? I want to get answer from those who have actually tried it and are confident in their response.

No, as long as you go with the normal process. There's really no worry about these exchanges if you do arbitrage. If ever you see an opportunity like this, the question is how long you'll be able to do it. Because at most times, the arbitrage opportunities are no longer there and are hard to find. They won't flag you for doing such as it's been there being normal even before. You may try to see on how your exchange(Binance) will react on it but to say that, they wouldn't really care at all.

[GreatArkansas]

(...)

At the same time, coinbase had way better rates than Binance. Is it legal to buy tons of coins on Binance, withdraw, deposit on Coinbase and immediately sell the coins, then buy USDT and withdraw on Binance again?

That is called arbitrage trading. Some traders make use of arbitrage trading to make money, but high amount of money is required to make good profit.

Exactly. To OP, make sure also that this way of trading is not always guaranteed a winning trade because now, there are already a lot of exchanges, and most of these exchanges are aligned together now with the price.
Another thing is this kind of trading before is very useful for some people especially when there are still few exchanges before.

[Bushdark]

Sport trading has a big difference between the future trading. Just like the name implies, spot is just like buying and selling what you have with a minimum risk that could be taken by anyone. Trading is mind business and it take a lot of understanding especially for the future trading for you to make s reasonable profits.

I enjoy spot trading because of the minimal risk and that could be done when the market have huge volatility and moves well. Bull market is the best market to enjoy the spot trading compared to future trading that uouncam easily trade the market even when it is ranging.

[Bitcoin_Arena]

Because futures trading is a scam. You're doing virtual trading where your gain or loss depends on the index, not the real price of a coin and you don't own the coin at any moment.

Virtual trading?

Traders are literally using their real funds as collateral, and you call it virtual trading? Lol

If you got burned trading derivatives before, it shouldn't be a basis you use to call it a scam. Just know that on that day, someone on the other side made profit out of you

Futures prices are so disconnected from reality because they aren't real. Stay away from it.

Stick to buying and selling physical commodities, then. Like barrels of crude oil, I bet it will be very convenient for you.

[justdimin]

Is it legal to buy tons of coins on Binance, withdraw, deposit on Coinbase and immediately sell the coins, then buy USDT and withdraw on Binance again?

It is legal but subject to your daily/weekly/monthly withdraw or deposit limits. All the above, if you do like you have mentioned, did you calculate how long such price differences will exist? In most cases, if you buy/sell in large quantity then prices in both the exchanges will converge as early as possible. When the price gap is not significant or not enough for covering for the fees to pay for placing orders (buy and sell), withdrawing from an exchange and network tx fees then there will be no point of planning for buying in one exchange and selling in other exchange in larger quantity.

When something like this is not feasible in large quantity, most people do not like to go for it in even in small quality as well due to the hassles involved in moving funds from one exchange to another. Probably you may try for it in small quantity if you have funds initially in both of the exchanges initially (to save time by not waiting for network confirmation before gaps disappear) and if you are KYC verified (for ensuring not getting locked while withdrawing).

[Franctoshi]

In addition to what others have said so far, from what I have experienced ,Volatility is one of the things that usually causes this difference in the price between the spot and future contracts , basically this occurs mostly in the future contact side, either it's lower or higher than the actual spot price as a result that smart money players are hunting for stops in order to liquidate retail traders in a buying or selling market in the future contract side and hence cause this price difference.

[Oshosondy]

Because futures trading is a scam. You're doing virtual trading where your gain or loss depends on the index, not the real price of a coin and you don't own the coin at any moment.

No matter how long your explanation is, know that future trading is not a scam. Anyone that is scammed do not know someone has intention to scam him or her, the person do not know what is going on underneath. In future trading, everything is well explained and you know what you are going and how risky it is.

[pixie85]

Virtual trading?

Traders are literally using their real funds as collateral, and you call it virtual trading? Lol

If you got burned trading derivatives before, it shouldn't be a basis you use to call it a scam. Just know that on that day, someone on the other side made profit out of you

If you're betting fiat money on bitcoin without buying said bitcoin, you're involved in virtual trading.
Ask yourself a simple question. If you can short or long bitcoin, with leverage if that's your thing, why would you choose to buy a virtual contract that follows the price of bitcoin instead of the real thing?

Stick to buying and selling physical commodities, then. Like barrels of crude oil, I bet it will be very convenient for you.

Thanks for your advice, but I'll simply stick to buying bitcoin. It's much more convenient than buying bitcoin futures.
Sure oil or copper contracts exist because most of us don't have a way to store large quantities of these materials. This doesn't apply to bitcoin though. It's very easy to store and move around.