Ape Mithrandir on Nostr: The price of Bitcoin can be a different quantity for different people. You might ...
The price of Bitcoin can be a different quantity for different people. You might recall the 2017 arb between the Korean price and the USD price.
If I choose to only ever trade on Bisq, then my bitcoin price will be whatever is available on Bisq.
I guess when you refer to price you refer to the lowest friction most liquid representation of the price. Then you are trying to talk about the factors that influence the price of the lowest friction most liquid representation of the price.
I think you simplified the representation by talking about CEX price as a single quantity. Technically every currency pair is slightly different. Every CEX will also differ in price, with the price potentially varying alongside the credit worthiness, or simply from the long/short bias differences in the userbase.
You also have the price of futures vs the spot market, which is very actively traded too, in addition to the OTC trading desks.
In a Liquid well capitalized market these differences will be small, and track the cost of capital for putting on the spread to arbitrage the price descrepancies.
Back to the case of Bisq, if we say it is not common for people to arbitrage the price difference. Consider the Bisq users might have two separate KYC and non-KYC stacks which never mix, but if they want to exchange BTC for fiat or vice versa they might prefer Bisq vs CEX on the margin at some price difference. Thus in that way they can still affect an influence on the price in the other venues.
Above all the influence on price will be proportional to the volume traded. Though CEX can play games with inflating volume, they still have >99.99% market share for price discovery.
If I choose to only ever trade on Bisq, then my bitcoin price will be whatever is available on Bisq.
I guess when you refer to price you refer to the lowest friction most liquid representation of the price. Then you are trying to talk about the factors that influence the price of the lowest friction most liquid representation of the price.
I think you simplified the representation by talking about CEX price as a single quantity. Technically every currency pair is slightly different. Every CEX will also differ in price, with the price potentially varying alongside the credit worthiness, or simply from the long/short bias differences in the userbase.
You also have the price of futures vs the spot market, which is very actively traded too, in addition to the OTC trading desks.
In a Liquid well capitalized market these differences will be small, and track the cost of capital for putting on the spread to arbitrage the price descrepancies.
Back to the case of Bisq, if we say it is not common for people to arbitrage the price difference. Consider the Bisq users might have two separate KYC and non-KYC stacks which never mix, but if they want to exchange BTC for fiat or vice versa they might prefer Bisq vs CEX on the margin at some price difference. Thus in that way they can still affect an influence on the price in the other venues.
Above all the influence on price will be proportional to the volume traded. Though CEX can play games with inflating volume, they still have >99.99% market share for price discovery.