Many people have heard of 'arbitrage trading', but always feel that the price difference appears out of thin air. In fact, there is logic behind it 👇👇👇
⭐1. Market Segmentation
The user structure of different exchanges is different; some are mainly European and American users, while others are mainly Asian retail investors. With different demands, prices naturally vary.
⭐2. Supply and Demand Imbalance
At the same time, some people are eager to buy, while others are eager to sell. The differences in depth and liquidity across exchanges can lead to price discrepancies.
⭐3. Funding Rates & Basis
Between the futures market and the spot market, there is a 'funding fee' mechanism, and this structural difference can also lead to price differences.
⭐4. Information Asymmetry
Some exchanges list new coins quickly, resulting in immediate buying pressure; others delay listing, causing prices to reflect slowly, which creates arbitrage opportunities.
👉 In summary:
The price difference does not come from nowhere, but is caused by market structure and human demand. What arbitrageurs do is to bridge these differences through 'buying low and selling high', turning volatility into profit.
👉 Next time you see a price difference, don't think it's a BUG; it's an arbitrage opportunity! 🤑🤑
