Redditor cardevitoraphricticia recently pointed
out that the spreads on Mtgox are up to 1%.
That means that in addition to any other fees incurred the transaction participants
are each paying some % of a 1% spread when they trade, a fairly expensive processing
cost given Bitcoin’s fairly fluid nature.
He goes on to hypothesize that this means that the high frequency
traders who were stabilizing the markets may be backing off. This could mean two things opportunity (for
those who want to step into their place) or risk (if there are happenings a
going on that the general public is not aware of). For example, Mtgox does have a press release
on their own website discounting their involvement with the Silk Road.
The Reddit thread has a lot of other speculation
on what is causing the rift in prices but the movement in itself is a powerful
reminder of the valuable role that market makers play in price efficiency.
RSS Feed
Twitter
Facebook