Bitcoin arbitration: price difference of 600 dollars between exchanges

You probably got it now: the price of bitcoin dropped by more than a thousand euros yesterday. In the meantime, the smoke has increased somewhat and we can see what the damage is. More than 600 million dollars in longs have been wound up on the BitMex derivatives exchange. But what is also striking, the price of bitcoin differed considerably between certain cryptocurrency exchanges.

Act on arbitration

In professional jargon, dealing with such differences is also referred to as arbitration. Smart investors have an account with different crypto exchanges at the same time. In this way they benefit from the price differences between exchanges.

That is the case: when the price of bitcoin moves sideways, there are usually few differences between the prices of cryptocurrency exchanges. But when the rate rises or falls rapidly, the differences can be large. This can have various reasons. Maybe a bitcoin whale is active at one of the fairs. At that moment it is a matter of shifting your bitcoin to the exchange where you can achieve the most profit.

Such a large price difference was also the case yesterday evening. Economist and crypto-trader Alex Krüger saw that bitcoin at least was six hundred dollars more expensive on Coinbase. The difference between BitMex and Coinbase in particular was enormous.

Coinbase, Bitstamp and Gemini compared

What does that look like on the graph? You can see that below. We compare three different crypto fairs: Bitstamp (yellow), Coinbase (red) and Gemini (blue). The graph measures the relative price movements, so the exact amounts are not shown.

You can see that the rate is almost always the same, the difference between cryptocurrency exchanges is minimal. But at half past nine yesterday evening, the difference between Coinbase and other stock exchanges suddenly became great. By the way, that difference was rectified quickly enough. Since half past ten yesterday evening, the value of bitcoin was again the same on the three crypto fairs: