• 2 hours BHP Turns Bullish On EVs
  • 4 hours Investors Turn Bullish On America’s Nuclear Decommissioning Business
  • 20 hours The $90M Inflatable Rabbit Redefining Modern Art
  • 23 hours Huawei’s Fate In The Air
  • 1 day Tesla Slashes Prices Again
  • 1 day The Modern History Of Financial Entropy
  • 2 days Italy’s Central Bank Embraces Sustainable Investing
  • 2 days Trump Lifts Metals Tariffs To Cool Simmering Trade War
  • 2 days Researchers Push To Limit Space Mining
  • 2 days Could China Start Dumping U.S. Treasury Bonds?
  • 3 days Is Winter Coming For HBO?
  • 3 days Rise Of EVs Signals Peak Gasoline
  • 4 days Jeff Bezos Doubles Down On Space Colonization Ambitions
  • 4 days Gold Mining Stocks Stuck In Limbo
  • 5 days Executive Order Targets Huawei Over Espionage
  • 5 days Why Now May Be The Best Time Ever To Hold Gold
  • 6 days Fake News Sinks Shares In UK-Based Bank
  • 6 days De Beers To Build $468 Million Diamond Recovery Ship
  • 6 days Moody's: Turkey Faces Possible Credit Downgrade
  • 6 days Tesla's Solar Sales Are Slipping
Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

How Millennials Are Reshaping Real Estate

How Millennials Are Reshaping Real Estate

The real estate market is…

Ross Pilot

Ross Pilot

www.newcurrencyfrontier.com

Ross Pilot has been working in the investment research publishing field since 2010, as partner in two successful financial publications that quite frankly have made…

Contact Author

  1. Home
  2. Markets
  3. Other

Labour Day Weekend Bitcoin Brawl: East versus West

The Chinese government’s decision to ban initial coin offerings triggered an epic selling spree that dropped Bitcoin from a high of $5000 USD down to a low of $3950 in the space of three days. That’s a drop of 21 percent.

In comparison, on October 19th, 1987, the Dow Jones Industrial Average fell 22 percent. But remember that Bitcoin trades 24/7, 365 days a year. Bitcoin reached it’s high of $5000 on Friday afternoon and started dropping all through the weekend.

What is almost shocking is the difference in price in Bitcoin between Asian and North American markets.

During the weekend, the spread was often more than $200. For example, as late as Monday, September 5th, at 18:15 (UTC), the North American price of Bitcoin at Coindesk (which follows Coindesk exchange) was $4243. Meanwhile at the Taiwanese exchange Bitfinex, the price was $3950.

Bitfinex with a low of $3950

Coinbase at more than $4200

That’s a spread of more than six percent!

Any derivative trader in any traditional currency market would kill for a spread of one-half percent, but all weekend long there were spreads of more than four percent. If you have been able to shuffle funds back and forth only three times over the weekend, you would have made 12 percent risk-free.

But of course, compared to traditional currency markets, the cryptocurrency is still taking baby-steps. While transferring Bitcoin through the worldwide blockchain can take just a few hours, withdrawing and depositing fiat currency (i.e. American dollars) to exchanges can take days if not weeks.

But rest assured, there were multiple investment bankers and hedge fund managers looking at the action over the weekend and wondering how they could get a piece of it.

The flow of Bitcoin from East to West could also be seen in the price of Bitcoin futures contracts dipping when during daylight (trading) hours in Asia, and then rising when North America woke up.

So how does Joe Trader make money from these trading patterns?

1. Watch out for announcements from regulators, especially off-hours.

One could be slightly suspicious of the timing of the negative announcement from the Chinese regulators, on Friday afternoon, just when Bitcoin hit its all-time high. And then the price of Bitcoin at Bitfinex is remorselessly driven down during Labour Day weekend.

2. Off-hours trading for North America Traders offers better opportunity.

This is bad news for us with those who have family. But those that picked up the trend on the weekend that short-selling would start in Asia, as soon as North America went to bed, would have made a killing.

3. The Bitcoin network is by no means perfectly efficient, or even close to it.

A spread of 6 percent in a commodity aka Bitcoin that can be transferred around the world in a matter of hours or even minutes, should simply not exist. But it did.

In summary, it is worth remembering that Bitcoin is a currency that is owned all over the world, meaning that news from Asia on a Friday afternoon before a long weekend, could be critical in you making a LOT of money (or even losing it).

By Ross Pilot via http://www.newcurrencyfrontier.com 

Back to homepage

Leave a comment

Leave a comment