Re:Intruder at the top of the 20 meter amateur band?
by tgsovlerkhgsel on Monday January 11, 2021 @07:16PM
(#25740369)
This was actually visible on some cryptocurrency exchanges, where the EURUSD exchange rate differed significantly (>5%) from the regular market exchange rate.
I believe that arbitrage within the platform kept the prices and exchange rates consistent (i.e. it didn't matter whether you bought Bitcoin for EUR or first changed the EUR to USD then used that to buy Bitcoin), but of course you could make/lose some money by exchanging EUR <--> USD on the platform then exchanging it back outside (or simply exchanging it on the platform, waiting until arbitragers brought the exchange rate back to normal levels, then exchanging it back).
But in effect, the lack of efficient arbitrage between the platform and the "real world" that allowed EURUSD rates to drift so far meant that how much your coins were worth depended on what currency you bought/sold them for, making the whole thing highly annoying.
The cryptocurrency markets, which seem less mature/complicated/HFT-overrun than the "big" markets, are great for learning market principles.
I believe that arbitrage within the platform kept the prices and exchange rates consistent (i.e. it didn't matter whether you bought Bitcoin for EUR or first changed the EUR to USD then used that to buy Bitcoin), but of course you could make/lose some money by exchanging EUR <--> USD on the platform then exchanging it back outside (or simply exchanging it on the platform, waiting until arbitragers brought the exchange rate back to normal levels, then exchanging it back).
But in effect, the lack of efficient arbitrage between the platform and the "real world" that allowed EURUSD rates to drift so far meant that how much your coins were worth depended on what currency you bought/sold them for, making the whole thing highly annoying.
The cryptocurrency markets, which seem less mature/complicated/HFT-overrun than the "big" markets, are great for learning market principles.