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Bitstamp exchange price for Bitcoin is right now 1056.07 USD

https://bitcoinaverage.com/en/exchanges/bitstamp/btc-to-usd

while Bitfinex is 963.41 USD

https://bitcoinaverage.com/en/exchanges/bitfinex/btc-to-usd

Is it possible to exploit such a big difference to extract value? Probably this is a well known strategy on markets, but my finance knowledge is quite limited.

Is there any bot doing that kind of operations without human intervention? Thx!

Refs.:

Bitcoin trading at bitstamp

How Does One Make Money from Bitcoin Trading?

Need help understanding how to profit from bitcoin trading (like forex?)

Is there a forum-like exchange for trading Bitcoins person-to-person?

http://en.wikipedia.org/wiki/Order_book_%28trading%29

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Nobody knows whether Bitfinex is insolvent or not. As a result, dollars at Bitfinex are worth less than dollars at other exchanges. This accounts for the price difference you see. To exploit this difference, you would have to send dollars to Bitfinex and command them to make what appear to be fraudulent transfers on your behalf.

See this article for more details. Some excerpts:

Bitfinex has imposed a haircut on all of their depositors.

For those whose deposits were not held in segregated accounts, there is no question that the deposits constituted general obligations, payable on demand, on the part of Bitfinex. To justify making anything less than a full payment on a general obligation that is payable on demand, a company would have to be insolvent or illiquid.

By definition, if you don't have sufficient assets to make the payments you are obligated to make, you are insolvent. There's no reason to think Bitfinex has assets that are not liquid. They imposed a haircut because they don't have assets to cover the funds their depositors have every right to demand from them. They are insolvent.

When you deposit funds at Bitfinex, they have your funds. You have a promise that they will repay you the funds you deposited. But you're just another creditor on their list of creditors. You get funds if they have them and not if they don't. Your deposit is another general obligation of Bitfinex, a company that is insolvent.

An insolvent company cannot make full payment to a junior creditor without court approval (or consent of all their creditors) -- such a transfer would be fraudulent. We know Bitfinex has not gone to court as they would have to have given notice. When you deposit money at Bitfinex, you become a junior creditor. When you command a trade or withdrawal, you are commanding full repayment of yourself, that is, you are ordering them to make a fraudulent transfer on your behalf.

Fraudulent transfers are subject to clawback. That is, if you trade at Bitfinex, you may eventually get a letter from a trustee or receiver demanding you repay the money you made or even the full value of the assets you withdrew.

  • But at kraken.com xbt/usd is 1057.58 and Bitfinex rate is 963.41, similar to Gdax 967.42. Any problem with kraken too? – Juan Ignacio Pérez Sacristán Feb 8 '17 at 17:58
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    Kraken is fine. That's why the rate at Kraken reflects the rate at other reliable exchanges. Bitfinex is (was) the outlier. When you see a rate at an exchange that's far out of whack, something is almost certainly wrong with that exchange. (If you don't know why it's out of whack, trading to exploit that difference is very risky.) – David Schwartz Feb 8 '17 at 17:59
  • So, are you saying that Bitfinex is fraudulent? What makes you say that other exchanges are not? – marcolopes Dec 23 '17 at 20:19
  • I'm not saying Bitfinex is fraudulent, just that there happened to be an incident at that time that caused people to value money at that exchange differently. – David Schwartz Dec 27 '17 at 19:30
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I've just found the concept for this practice and wanted to share:

https://en.wikipedia.org/wiki/Arbitrage

In economics and finance, arbitrage is the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices.

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