Why are the exchanges so intertwined?

arbitrage001

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Quote from: BootstrapCoinDev on November 12, 2014, 12:39:53 PM

Yep, transfer fiat to bitstamp, and btc to bitfenix, buy at 400 on bitstamp, get btc out of bitstamp, and simultaneously sell btc at 409 on bitfenix, rinse and repeat. at times get btc out of bitstamp and send them to bitfenix, get the fiat out of bitfenix and send to bitstamp. these are all the needed steps for a roundtrip. you have utilized the spread of 10% only once, but for more than one of the steps you have to pay a percentage on the full amount.

Low level technique.

There are some other high level arbitrage techniques that doesn't involve moving fiat and hence raise some pretty bad red flag with your local bank.

RobertDJ

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Quote from: pattu1 on November 12, 2014, 12:03:18 PM

Quote from: cafucafucafu on September 01, 2014, 11:14:44 AM

If the price changes on an exchange then the change is seen very quickly on other exchanges? Why is this? Do the exchanges ensure this or the users? Or is it bots which access many exchanges at once?

I can't see users reacting so quickly to a price changes and actually implementing those changes on other exchanges.

If there is arbitrage, people or bots are going to quickly make use of it.
This results in price stabilization across exchanges.

This is exactly correct. It is not that the various exchange are connected to eachother, it is that market participants are going to "correct" the prices on the different exchanges if one price differs from other exchanges too much, provided that the exchange can be sufficiently trusted

BootstrapCoinDev

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Yep, transfer fiat to bitstamp, and btc to bitfenix, buy at 400 on bitstamp, get btc out of bitstamp, and simultaneously sell btc at 409 on bitfenix, rinse and repeat. at times get btc out of bitstamp and send them to bitfenix, get the fiat out of bitfenix and send to bitstamp. these are all the needed steps for a roundtrip. you have utilized the spread of 10% only once, but for more than one of the steps you have to pay a percentage on the full amount.

pattu1

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Quote from: cafucafucafu on September 01, 2014, 11:14:44 AM

If the price changes on an exchange then the change is seen very quickly on other exchanges? Why is this? Do the exchanges ensure this or the users? Or is it bots which access many exchanges at once?

I can't see users reacting so quickly to a price changes and actually implementing those changes on other exchanges.

If there is arbitrage, people or bots are going to quickly make use of it.
This results in price stabilization across exchanges.

cutesakura

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in the stock market a great deal going on exchange value of the currency is going very fast, we must be cautious in predicting whether the value of a currency will rise or fall, rise or fall of a currency depends on how many requests to sell or buy the currency, the more traders buy a currency, the value of the currency will be getting up, and when more and more the trader sells a currency, the value of the currency will fall ... Cool

TinaK

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The Bitcoin world is linked, if there won't fall the price like others, it would lost much.

lihuajkl

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the market force (supply and demand)makes them interwind, which means their price move the same direction at the limited range. otherwise like MtGox, its price departed too much from the market average price and monopolies the price, and ended up going to bankruptcy.

LMGTFY

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Quote from: obocaman on September 04, 2014, 12:47:32 PM

What the hell is intertwined? Grin

A word other posters are confusing with "intervened" Wink

"Intertwined" is connected together (possibly loosely) - think of several lengths of twine (string, thin cord, yarn, etc) jumbled up, and then pulling on the end of one piece - it'll make the other pieces of twine move too. It's quite a good analogy for the loose coupling between exchanges, IMO.

pikabit

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They are not, do you know its the real free market? fiat is intervened, not crypto markets.

flyingcatt

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They are not intervened, whales moving prices isnt "intervened."

counter

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Time is on our side, yes it is!

Yea people are always watching the price in hopes of taking advantage of these kinds of situations. I've been around at the right time myself and have been amazed by how fast the price will fluctuate from exchange to exchange. Now you know to move fast when the opportunity arises. Also don't forget that the chat boxes of full of people talking about how to make money so one post could alert many people if there is a difference in price from exchange to exchange.

obocaman

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What the hell is intertwined? Grin

BitcoinBadger

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Quote from: cafucafucafu on September 01, 2014, 11:14:44 AM

If the price changes on an exchange then the change is seen very quickly on other exchanges? Why is this? Do the exchanges ensure this or the users? Or is it bots which access many exchanges at once?

I can't see users reacting so quickly to a price changes and actually implementing those changes on other exchanges.

I guess the bots do it.Nowadays any forex traders have jumped onto bitcoin trading.

yunkie

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What do you mean intervened? crypto exchanges are 100% free, wild wild west.

wasserman99

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Quote from: waterpile on September 02, 2014, 02:42:10 AM

Quote from: RobertDJ on September 01, 2014, 03:29:54 PM

I would disagree that the exchanges are intertwined. Their prices all move together, but they do little/no business with each-other. If one exchange were to close down for whatever reason, the other exchanges would not be affected (other then the potential for increased business).

I don't think so. try to buy big orders and compare the prices to another exchanger and you will see that they don't all move together

The prices do move together but this is not because the exchanges are in any way connected. It is because when the price on one exchange moves, people will attempt to use arbitrage to exploit minor differences in the prices between exchanges. So for example if the price declined on exchange A someone would sell bitcoin on exchange B (which has bitcoin trading at higher levels) and buy an equal amount on exchange A

waterpile

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Quote from: RobertDJ on September 01, 2014, 03:29:54 PM

I would disagree that the exchanges are intertwined. Their prices all move together, but they do little/no business with each-other. If one exchange were to close down for whatever reason, the other exchanges would not be affected (other then the potential for increased business).

I don't think so. try to buy big orders and compare the prices to another exchanger and you will see that they don't all move together

titulng

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HubrisOne

Because many people doing arb

cafucafucafu

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Quote from: HarHarHar9965 on September 01, 2014, 03:19:03 PM

Quote from: ?? on ??

Users of exchanges will anticipate arbitrage. So if price changes a lot on one exchange, traders on other exchanges will move in that direction.

This is my position -- I don't think it's really arbitrage that does it in most cases. As fast as bitcoin moves, it's still not fast enough. So traders are filling the gap.

More than anything, western exchanges follow moves on Chinese exchanges, expecting them to be followed across the market.

Its amazing how a dip on a western exchange with little volume affects the big chinese exchanges!!

RobertDJ

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I would disagree that the exchanges are intertwined. Their prices all move together, but they do little/no business with each-other. If one exchange were to close down for whatever reason, the other exchanges would not be affected (other then the potential for increased business).

HarHarHar9965

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Quote from: ?? on ??

Users of exchanges will anticipate arbitrage. So if price changes a lot on one exchange, traders on other exchanges will move in that direction.

This is my position -- I don't think it's really arbitrage that does it in most cases. As fast as bitcoin moves, it's still not fast enough. So traders are filling the gap.

More than anything, western exchanges follow moves on Chinese exchanges, expecting them to be followed across the market.

Topic: Why are the exchanges so intertwined? (Read 2709 times)