The Bitcoin Exchanges and Price Differences

Story by By   Petar Kotevskin on Mar 22, 2015

With the bitcoin market in another lull, this is a good time to do an educational article. We haven’t done one of these in a while. If you’re looking for the current levels we’re watching, take a look at our yesterday roundup. Not much has changes since then with BTC/USD still trading near $259 per coin.

The bitcoin market is decentralized. There is no central bitcoin exchange or a clearing house that all orders have to go through. This means that price differentials exist between exchanges. During our analysis, we use BTC-E charts to identify our levels. There are several reasons why we do this, but more on this in other articles.

We frequently get comments by users trading on other exchanges, saying bitcoin didn’t hit level X on OKCoin, or bitcoin already traded past level Y on Huobi. In this article we’ll go over how you can still use our levels even if you’re trading on other bitcoin exchanges. The first link you need to bookmark before we proceed is OKCoin’s Market List.

This webpage has current quotes from all the major BTC exchanges in one easy to see view. These are just the spot trading exchanges, more on bitcoin futures below. On the current snapshot above we can already notice the price differentials. For example, BTC-E is trading at $258.26 while OKCoin is trading at $260.51. This is inline with the usual $2 to $3 dollars price differential between BTC-E and the other USD bitcoin exchanges. As can you see on the chart above, all other USD to BTC exchanges OKCoin.com, BitStamp, Bitfinex and Coinbase are trading at $260.

The 3 major Chinese exchanges on the other hand, are trading at their own markup of around $2-$3 dollars over the USD exchanges. As we can see on our pic, all 3 major Chinese exchanges OKCoin.cn, Huobi and BTC China are quoted at $262.

Now let’s tackle futures. We’ll use OKCoin’s futures as an example. Futures contracts use an ”Index” for their settlement. OKCoin uses a mix of all major bitcoin exchanges, with a heavy weighting from the Chinese sites. This means that the the ”Index” will move closer to the prices seen on Chinese bitcoin exchanges. The current price for OKCoin’s Index is at $261.63. Prices on futures exchanges do not strictly follow the ”Index” but they will certainly gravitate towards it. You can see live prices for OKCoin futures as well as the Index HERE.

To summarize: BTC-E, USD Bitcoin Exchanges +$2/$3, Chinese Bitcoin Exchanges +$2/$3, Futures trade closer to Chinese prices with a slight discount because USD exchanges are included in the calculation. Keep in mind that the usual $2-$3 dollars differential between the exchanges can get out of whack during high volatility. During large rallies or major sell-offs these price difference will widen.

via. http://www.forexnews.com/blog/2015/03/22/bitcoin-exchanges-and-price-differences/

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