Cryptocurrency spreads : the influencing factors

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The liquidity of each cryptocurrency that can be processed on cryptocurrency purchasing or trading platforms depends on customers’ supply and demand. Some crypto establishments try to play "market-maker" when trading volumes are too low. But roughly speaking, each cryptocurrency’s rating can register "rating gaps" as soon as a sizeable buyer/seller enters or leaves a position.

Cryptocurrencies are very volatile because they are not "centralized". A customer (alone) can shift a cryptocurrency’s rating by several percent at once. The lower the trading volume of a cryptocurrency, the higher the spread can be, or the rate can be volatile.

Cryptocurrency rate spreads vary every second depending on the order book, the best buy/bid offered by the crypto establishment’s customers.

Cryptocurrency spreads vary from one institution to another. But they allow some individual traders to arbitrate on cryptocurrencies between two establishments.

With two Bitcoin accounts, for example, they can arbitrate the Ethereum rating. But you should consider that automatic systems are already installed so as not to leave too much room for manoeuvre. This is true of major cryptocurrencies. But I suggest that you compare a cryptocurrency’s order book (versus BTC) on two trading platforms, and you will then see that the "rating gaps” leave room to arbitrate.

I can already see your first question: "but how can I buy on one side and sell on the other at the same time? Because you can't sell a cryptocurrency short."

My first answer would be: "There are CFDs on Bitcoin today. And CFDs let you deal on both the long and the short sell. So Bitcoin arbitration is already possible with this solution. The other solution is to always hold X amount of the trade-off crypto on both accounts, with a sufficient Y balance to buy in Bitcoin or Ethereum. So you can sell them on one side to buy on the other. Then you re-balance by a crypto transfer post arbitration. The problem with this second solution is that you are always positioned to purchase (in substance) on this cryptocurrency.

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