Coinbase buy price is pegged to Bitstamp

ShakyhandsBTCer

sr. member

Activity: 448

Merit: 250

It's Money 2.0| It’s gold for nerds | It's Bitcoin

Quote from: cloverme on February 26, 2014, 03:21:00 PM

Quote from: _wayfarer_ on February 25, 2014, 04:07:11 PM

Quck update: Coinbase no longer seems tied to Bitstamp, at least not this very moment. Both the buy and sell prices are above Bitstamp's. They're either making a hard buy themselves, or are tracking to another system. Any ideas?

Will try to back my findings up with new charts, soon.

I just started to notice this the other day as well. I figured since they were a BTC/USD exchange they would just establish a market rate themselves. The only thing I don't like about coinbase is you can't put in reserve buy/sell orders at a given market price. Meh, other than that I like coinbase a lot, very stable and reliable.

They likely use a number of exchanges and probably keep some for their own investment without even using an exchange at all.

For example if one person wants to buy one bitcoin they can sell it to them for $600 (they would already own it). Then if someone wanted to sell a bitcoin they could buy it from them for $589 to replenish their supply. Then they can adjust their prices based on a number of exchanges and based on how much people are buying and selling.

redwhitenblue

member

Activity: 104

Merit: 10

This is not surprising.

Do you have a negative consequence to this?

Coinbase provides a valuable service to many (including newer) BTC users. They should be compensated for this service (buying/selling BTC).

_wayfarer_

member

Activity: 93

Merit: 10

Software Engineer

I built a trading platform for Coinbase using in part the data I've collected so far. You can log into my platform here: https://daybittrader.com/login/coinbase/ (Requires a Coinbase account). I'm looking for early adopters only, no big announcement yet.

_wayfarer_

member

Activity: 93

Merit: 10

Software Engineer

Quote from: cloverme on February 26, 2014, 03:21:00 PM

I just started to notice this the other day as well. I figured since they were a BTC/USD exchange they would just establish a market rate themselves. The only thing I don't like about coinbase is you can't put in reserve buy/sell orders at a given market price. Meh, other than that I like coinbase a lot, very stable and reliable.

I've developed my own tool that does buy/sell/stop loss orders through Coinbase, it works completely for me so far, but is only prepared for small scale deployment. Anyone want to help me beta test it?

cloverme

legendary

Activity: 1512

Merit: 1054

SpacePirate.io

Quote from: _wayfarer_ on February 25, 2014, 04:07:11 PM

Quck update: Coinbase no longer seems tied to Bitstamp, at least not this very moment. Both the buy and sell prices are above Bitstamp's. They're either making a hard buy themselves, or are tracking to another system. Any ideas?

Will try to back my findings up with new charts, soon.

I just started to notice this the other day as well. I figured since they were a BTC/USD exchange they would just establish a market rate themselves. The only thing I don't like about coinbase is you can't put in reserve buy/sell orders at a given market price. Meh, other than that I like coinbase a lot, very stable and reliable.

keithers

legendary

Activity: 1456

Merit: 1001

This is the land of wolves now & you're not a wolf

Quote from: skivrmt on January 11, 2014, 08:16:46 PM

Quote from: _wayfarer_ on January 11, 2014, 07:53:32 PM

Quote from: mrjeff on January 11, 2014, 07:32:51 PM

The prices might be derived from the exchanges but do we really know how many of those coins end up on the exchanges? I'd imagine they'd keep some off the exchanges and just transfer BTC between the wallets of their own members to save on fees.

Agreed, I think it would be crazy if they didn't keep at least some coins

But how though? Every purchase you get your own address that you can receive coins to for a transfer in. But they do claim 90% of all coins held offline.

They keep some in hot wallets for instant buys and transfers, and the remainder is kept in cold storage. This is why it takes some time if you make a big withdrawal... i.e. like maybe 20 BTC or more

_wayfarer_

member

Activity: 93

Merit: 10

Software Engineer

I updated my charts, cutting MtGox out of the equation completely for now. And, I made a new chart, comparing the sell price on Coinbase with the bid price on Bitstamp. My theory is that Coinbase is doing a heavy buy themselves at today's prices, but they began buying less aggressively about 12 hours ago, when as you can see the spread between the two tightened somewhat.

All times in UTC:

_wayfarer_

member

Activity: 93

Merit: 10

Software Engineer

Quck update: Coinbase no longer seems tied to Bitstamp, at least not this very moment. Both the buy and sell prices are above Bitstamp's. They're either making a hard buy themselves, or are tracking to another system. Any ideas?

Will try to back my findings up with new charts, soon.

keithers

legendary

Activity: 1456

Merit: 1001

This is the land of wolves now & you're not a wolf

Coinbase withdraws to blockchain.info seem to be taking longer than they used to. When I first started it would almost immediately show up as an unconfirmed transaction over on the blockchain side, but lately it seems to take longer. I am assuming this is because of the amount of withdrawals they are processing are probably 20 times what they used to be, but I'm not sure...

I'm not complaining at all, but if you are trying to physically purchase something from someone, or accept a payment in person for some sort of goods that you are selling, you will be standing around waiting longer than you used to have to...

_wayfarer_

member

Activity: 93

Merit: 10

Software Engineer

Quote from: skivrmt on February 19, 2014, 09:28:11 AM

BTC and Stamp small arb, but you would need very high volume to combat the fees.

Yeah, I've thought of pitching that idea to an investor before, but I think it will be viewed as too risky in today's climate.

skivrmt

hero member

Activity: 994

Merit: 501

Quote from: halcyon on February 18, 2014, 01:49:03 PM

Quote from: keithers on February 18, 2014, 01:33:50 PM

Quote from: halcyon on February 18, 2014, 01:19:21 PM

Quote from: keithers on February 18, 2014, 01:10:07 PM

Although coinbase says that they draw their value off a number of exchanges and algorithms, it seems pretty apparent that it is pegged to bitstamp. When there is a large differential in the bitstamp and coinbase price, I think they are just executing buy and sell orders in between coinbase users...

I rather think there are various highrollers who arb between coinbase & bitstamp

You think they are withdrawing via coinbase or withdrawing from bitstamp. Obviously if you are doing that, you have to take into consideration the fees over at coinbase, (bitstamp too if they have withdraw fees). I haven't used bitstamp directly. Although the fees are relatively small, it definitely cuts into the margins if you are just trying to capitalize between the price differential between the two...

you are right about the fees... but my point was rather that I think the reason for the price difference being so low is the arbitrage.
let´s assume the spread between coinbase and bitstamp grows to 30 $.

there is an arbitrage opportunity, someone buys at the lower price (e.g. bitstamp), withdraws the BTC, transfers them to coinbase and
exchange it for fiat.

And because of this going on arbitrage it looks like the coinbase price is pegged to bitstamp.

in one sentence -> if the difference gets larger than amount "x", people abuse this arbitrage opportunity and the price difference disappears Wink

Coinbase/Bitstamp spread will never reach $30. Well maybe when Bitcoin goes to $100k. Wink

But Coinbase is a middle man, a broker, not an exchange. They use Bitstamp to purchase coins and collect a small spread between the bid/ask. No arbitrage there. BTC and Stamp small arb, but you would need very high volume to combat the fees.

_wayfarer_

member

Activity: 93

Merit: 10

Software Engineer

Quote from: bitpop on February 19, 2014, 01:40:50 AM

Arbitrage IS what stabilizes prices.

Between exchanges maybe. But Coinbase isn't an exchange, it's more like a broker.

bitpop

legendary

Activity: 2912

Merit: 1060

.

_wayfarer_

member

Activity: 93

Merit: 10

Software Engineer

Quote from: halcyon on February 18, 2014, 01:49:03 PM

you are right about the fees... but my point was rather that I think the reason for the price difference being so low is the arbitrage.
let´s assume the spread between coinbase and bitstamp grows to 30 $.

there is an arbitrage opportunity, someone buys at the lower price (e.g. bitstamp), withdraws the BTC, transfers them to coinbase and
exchange it for fiat.

And because of this going on arbitrage it looks like the coinbase price is pegged to bitstamp.

in one sentence -> if the difference gets larger than amount "x", people abuse this arbitrage opportunity and the price difference disappears Wink

It wouldn't make sense to design a system that is 100% reliant on people doing trades manually. This is the age of machine learning and REST API's. The computers can learn more quickly about other systems faster than a collective group of people, at least for the most low level data. And, Coinbase's sell price is pegged to below Bitstamp's, it just doesn't show in these charts.

halcyon

member

Activity: 70

Merit: 10

Quote from: keithers on February 18, 2014, 01:33:50 PM

Quote from: halcyon on February 18, 2014, 01:19:21 PM

Quote from: keithers on February 18, 2014, 01:10:07 PM

Although coinbase says that they draw their value off a number of exchanges and algorithms, it seems pretty apparent that it is pegged to bitstamp. When there is a large differential in the bitstamp and coinbase price, I think they are just executing buy and sell orders in between coinbase users...

I rather think there are various highrollers who arb between coinbase & bitstamp

You think they are withdrawing via coinbase or withdrawing from bitstamp. Obviously if you are doing that, you have to take into consideration the fees over at coinbase, (bitstamp too if they have withdraw fees). I haven't used bitstamp directly. Although the fees are relatively small, it definitely cuts into the margins if you are just trying to capitalize between the price differential between the two...

you are right about the fees... but my point was rather that I think the reason for the price difference being so low is the arbitrage.
let´s assume the spread between coinbase and bitstamp grows to 30 $.

there is an arbitrage opportunity, someone buys at the lower price (e.g. bitstamp), withdraws the BTC, transfers them to coinbase and
exchange it for fiat.

And because of this going on arbitrage it looks like the coinbase price is pegged to bitstamp.

in one sentence -> if the difference gets larger than amount "x", people abuse this arbitrage opportunity and the price difference disappears Wink

keithers

legendary

Activity: 1456

Merit: 1001

This is the land of wolves now & you're not a wolf

Quote from: halcyon on February 18, 2014, 01:19:21 PM

Quote from: keithers on February 18, 2014, 01:10:07 PM

Although coinbase says that they draw their value off a number of exchanges and algorithms, it seems pretty apparent that it is pegged to bitstamp. When there is a large differential in the bitstamp and coinbase price, I think they are just executing buy and sell orders in between coinbase users...

I rather think there are various highrollers who arb between coinbase & bitstamp

You think they are withdrawing via coinbase or withdrawing from bitstamp. Obviously if you are doing that, you have to take into consideration the fees over at coinbase, (bitstamp too if they have withdraw fees). I haven't used bitstamp directly. Although the fees are relatively small, it definitely cuts into the margins if you are just trying to capitalize between the price differential between the two...

halcyon

member

Activity: 70

Merit: 10

Quote from: keithers on February 18, 2014, 01:10:07 PM

Although coinbase says that they draw their value off a number of exchanges and algorithms, it seems pretty apparent that it is pegged to bitstamp. When there is a large differential in the bitstamp and coinbase price, I think they are just executing buy and sell orders in between coinbase users...

I rather think there are various highrollers who arb between coinbase & bitstamp

_wayfarer_

member

Activity: 93

Merit: 10

Software Engineer

Quote from: keithers on February 18, 2014, 01:10:07 PM

Although coinbase says that they draw their value off a number of exchanges and algorithms, it seems pretty apparent that it is pegged to bitstamp. When there is a large differential in the bitstamp and coinbase price, I think they are just executing buy and sell orders in between coinbase users...

Could be. I hadn't really thought of it that way, but it could be possible. In my observation it doesn't fluctuate very much, and I've been able to predict many short-term Coinbase price fluctuations within a certain margin of error, without polling Coinbase, by streaming live trades from the Bitstamp servers.

keithers

legendary

Activity: 1456

Merit: 1001

This is the land of wolves now & you're not a wolf

Although coinbase says that they draw their value off a number of exchanges and algorithms, it seems pretty apparent that it is pegged to bitstamp. When there is a large differential in the bitstamp and coinbase price, I think they are just executing buy and sell orders in between coinbase users...

_wayfarer_

member

Activity: 93

Merit: 10

Software Engineer

I think recent events have definitely shored things up for Bitstamp, and all the data shows that my original assumption was more or less correct.

If anyone's interested, I made some of the numbers a little easier to read, and made the whole thing much faster. The faster loading charts will make it much easier to visit.

Here's some recent data from the current market trend:

Topic: Coinbase buy price is pegged to Bitstamp (Read 4939 times)