Why is the price so different on various bitcoin exchanges?

[Delonte]

Hey guys,

I'm sure it has been discussed several times before, but I couldn't find any info on that. The question is why the BTC price is so different on various bitcoin exchanges. Let's take Coindesk's BPI as an example (http://www.coindesk.com/price/). It takes into account four exchanges - Bitstamp, btc-e, BitFinex, and LakeBTC. The price on Bitstamp was around $18 lower at one point today compared to LakeBTC and BitFinex. That's like 6%! And such a high difference was there for a while. In fact, there is always a pretty significant price difference between exchanges. And that's only on these four markets, I'm sure Chinese exchanges sometimes offer even lower prices.

I know this must be basic economics, but how is this possible? This has to open huge arbitrage possibilities, but I haven't seen anyone really exploiting this area. Even after taking fees into account. Do these price differences mean that we are miles away from a perfect bitcoin market? Or am I missing something?

Thanks for your input, guys!

[anglo byte]

in different EXCHANGES are different traders who set the price

[1Referee]

in different EXCHANGES are different traders who set the price

Indeed.

And to say, I find BTC-E overal a better exchange as in price indication.

It's most of time time around $10 lower than Bitstamp in price which is used as source by many sites and people.

That's the beauty of Bitcoin, no one knows the exact price, it's what people want to pay for it.

I remember MtGox that had $100 higher price than all other exchanges  That was just insane!

[mandular]

in different EXCHANGES are different traders who set the price

People are behind that, so they set prices.

[bitkanu]

Asmoney.com is a new Exchange site and I get an exchange of my $$ there in a few hours .Payments are fast and as compared to other site fee is less 1.6% and rate of 1BTC is also good on site .
Easy Deposit / Withdrawal
Simple transfers to and from Bitcoin / Litecoin and other transfer options.

[duke1839]

I think BTC-e is lower because it is more difficult to deposit fiat there.  Occasionally Bitstamp's price dips below BTC-e because anyone trying to sell a large amount of bitcoin knows BTC-e is usually lower and chooses another exchange like Bitstamp.  Pricing contains information that cannot be gained elsewhere.  The truth is that nobody can tell exactly why the price is what it is nor can they tell you exactly why the price goes up or down.  Austrian economics has some interesting theories behind pricing and the information it contains.  For example, when the price of bitcoin dipped to $100 on Gox, that was an indication that Gox may be insolvent.

[Mieehayii]

Exchange is doing business from each other between users, and the users is different for each Exchange, different people have different view, so we can understand why the price is so various..

But you say arb? I think btc-e' price is more lower, may be you can see this about arb https://bitcointalk.org/index.php?topic=765074.0

[mullerdan]

The price will always be different, its depend on each trader and his interest.

[valvalis]

It depends with the trader who trade their bitcoin on those exchanges.
And I also find it strange with the significant price difference.

[GreenCoin22]

This has to open huge arbitrage possibilities

If you consider the cost of deposit and withdrawals etc, you arb profit is very little.