Bitcoin Price Variance Increases | dinbits


There's a large spread across digital currency exchanges and the market prices are all over the map. 

As of 7am, April 29th (UTC time)  BTC-e is reporting $1295.40, OKCoin is reporting $1256.48, and Quoine is reporting $1318.50.

That's an average of about $1290.13 USD.

On the opposite side of the spectrum, Bitfinex is reporting $1422, GDAX is reporting $1356.48, and both Gemini and Kraken are reporting around $1340 for an average of around $1364.62 USD.

That's a $74.49 variance between the upper level and lower level market prices. 

The overall dinbits index is officially reporting at $1346.21 which is $89.73 over the lowest exchange report (OKCoin, $1256.48) and $75.79 under the highest exchange report (Bitfinex, $1422) which almost makes cross-trading worth a shot.

What is Cross-trading?

Cross-trading is the process of buying from one exchange and selling on another exchange. For example, one may opt to buy on Bitstamp at it's current rate of $1330.94 and then sell on GDAX at $1356.38 for an immediate return of $25.79 per coin. 

The best current cross-trade would be from OKCoin at $1256.48 to Bitfinex at $1422 which would yield a return of $165.52 USD.

If you include P2P trading platforms such as Remitano, Paxful, Localbitcoins, etc... the gain can increase. Buying on OKCoin ($1256.48) and selling on Localbitcoins ($1556.39) would bring a profit of $299.91 per coin.

Both examples bring incredible returns. However .... cross-trading doesn't work that well in reality. You have to calculate the trading fees, withdraw fees, and the time between sending coins from one location to another. There may be a $10 spread between exchanges but by the time you double the fees, send through this blockchain which can take hours at times, and get someone on the target exchange to buy you coin, it's more plausible than not, that your $10 spread is gone or worse. In fact it could very well end up that the target exchange is then selling at a market rate less-than that of the exchange, of origin.

Another issue is that selling on Bitfinex might become problematic if you wish to do any profit-taking in USD since they continue, as does OKCoin, to have issues with withdraws as banks in the United States have been reportedly blocking transactions of this nature.

P2P (peer-to-peer) platforms make this more possible such as Localbitcoins, however, that takes much more skill patience and in many jurisdictions, licensing and registration since when you enter this realm of trade you are dealing with buyers directly in an OTC (over-the-counter) manner and are no longer under a custodial or investment "umbrella" and are responsible for upholding the regulation of the jurisdiction you are in, or selling to, on your own. 

The risk is also much higher for the exact same reasons. Without custodial protection you're prone to scams and being responsible for the regulatory requirements of those governing these types of transactions where you reside, or where you're selling, can land you in legal trouble or even facing criminal charges if not handled properly. 

There's a reason professionals doing this make the kind of money they do. Regulatory compliance and fraud prevention are not cheap and whereas compliance with regulations can help eliminate legal problems, fraud prevention programs and software only increase your odds for success. The risk remains high. 

That said, buying on Bitstamp and selling on GDAX still would return a gain and proposes less risk. With the current spreads, this is plausible. However a million things can go wrong, I remember a bot back in 2013 that did this very thing and it didn't do so well for many reasons. The main one being the time between trade A and trade B on blockchain C and that was 5 years ago when the blockchain actually worked

Still ... it is tempting to consider again, these spread wasn't as wide as they exist currently nor were the prices as stable as they are these days.

dinbits Index

Currently Bitfinex remains on our index however it alone doesn't affect the index more and a few dollars. 

That said, we are not weighting the Bitfinex volume. We've heard reports of some platforms having removed Bitfinex completely, however have been able to confirm only one website (bitcoinaverage) that has actually done this. Tradeblock is not weighting Bitfinex's volume (as dinbits is not) in its index but still including it in factoring the market rate. Tradeblock removed OKCoin completely from it's index earlier this year. 

Our position on this is that if a bitcoin is sold and the proceeds from that sale can be realized and vice-versa, then the exchange of that bitcoin counts for the value of medium in which it was exchanged for. This is why BTC-e remains on the index despite their consistently lower market rate and the same principal is applicable to Bitfinex with limited volume weighting. The restriction on the volume is due to the inability to fully realize the ROI without the ability to withdraw USD funds. 

Volumes may not be accurate since users have to buy back bitcoin to move funds anywhere and this could certainly be affecting both the volume and price. Bitfinex remain on the index and continue to be record by the minute, it just won't be weighted.




Article by dinbits
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