woah bitcoin plumbing slowing to a drippic.twitter.com/bZygLm5jDQ
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how do you even account for the risk between something like USD on coinbase (close to 100% safe) and Tether or USDC as the medium of trade on other exchanges? It's not a simple question lol I'm just curious about what the big quant possibility is here
I think volume is falling because volume is correlated with retail interest, which is correlated with price. Price is down so volume is down too! As you point out it's hard to do cross-exchange arb with a pure taking strategy because bid/offer is wide and commissions are high.
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To arb spot effectively you ideally want to get filled passively on one of the legs, so you collect spread and pay a reduced fee. You then cross spread to hedge on the other exchange. But getting filled passively requires volume!
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Volume helps in two regards - first it creates opportunities (e.g. a big trade on one exchange pushes up the price there) and second it gives better passive entry opportunities. Lower volume means less profit for arbs.
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