Bitcoin enables arbitrage trading

The oldest cryptocurrency grew in 15% during last 24 hours

It seems that investors found a way to trade Bitcoin in these uncertain times.

Economic theory describes arbitrage as a proof of market inefficiency. Arbitrage, that is purchase of a market asset for a lower price and then selling the same asset on a different market for a higher price, should secure the same assets or goods to be sold for the same price.

Yet, investors noticed that not all crypto stock exchanges trade Bitcoin for the same price at a certain time. That is, because Bitfinex platform sometimes appreciates Bitcoin up to $20 lower than Coinbase or Bitstamp exchanges. This enables traders to purchase Bitcoin from Bitfinex and sell it with profit on any other platform straight away. Another option is to sell on Bitstamp and purchase on Bitfinex in a moment.

This is a rare phenomenon as nothing similar to this is possible in a long term. While traders purchase on cheaper market and sale with higher price, the prices gradually equalize. Then there’s no need for arbitrage. As crypto exchange markets enable online trading, they approach the idea of economists on absolutely efficient markets.


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