Why prices differ between exchanges
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 4 min
In short
The same asset prices differently on different venues because each book stands alone. Arbitrage normally keeps the gaps small, but when transfers slow down or withdrawals halt, a gap can stay open. The size of the gap reflects how much friction sits between the venues.
Key points
- Each venue runs its own independent book
- Arbitrage normally keeps the gaps narrow
- Halted withdrawals or slow transfers keep them open
- Regulation and currency barriers can make gaps persistent
Definition
A state in which one asset trades at different prices on several venues at the same time, arising from separate order books and the friction of moving funds between them.
Exchanges do not share order flow. A BTC/JPY book and an overseas BTC/USDT book are separate markets whose prices come from their own participants. Arbitrageurs normally keep the FX-adjusted prices close together.
Gaps widen when friction rises: a congested chain slowing transfers, a venue pausing withdrawals for maintenance, fiat payouts that take business days. When you cannot move the asset from the cheap side to the dear side, the gap simply stays.
Regulatory or capital-control barriers can keep one country's venues persistently above or below the rest. There the gap is less an opportunity than the cost of how hard it is to move money in and out, showing up in the price.
Watch out for
- · An unusually large gap often signals a problem at one venue, such as frozen withdrawals
- · Price comparison sites refresh on their own schedule and will not match the live book
- · Before using overseas venues, check the Japanese regulatory and tax treatment