RE: This biggest reason steem prices are falling: The Arbitrage Sabotage Steem-Dollar Teeter-Totter
This idea that arbitrage can "exploit" anything is non-sense.
I agree. Im not sure what i said that made you think i thought otherwise.
Should traders avoid markets that offer better prices?
of course not. Like i said, i have nothing against arbiters. It would be absurd not to exploit an arbitrage. But markets that are not as responsive, like the internal market, should not be allowed to drag the price down. And yes, it absolutely is doing so.
Are the bids and asks on the internal market not real?
Of course they are real. However, the abriters are effectively selling the same X steem over and over again. So for example, lets say there are asks for 20K shares steem. Those asks will all be filled by the same arbiter selling 1000 shares 20 times. The same would be true if there were asks for 100K shares. NO matter what, thearbiters will fill asks by selling the same shares over and over until the sell pressure forces the external market price down to the internal market price.
There are many examples on bittrex and polinex of massive buy volume drivbing the price up, only to be immediately offset by equally massive arbitrage sell pressure setting it back down.
Im not sure if youre intentionally pretending not to understand what im saying, or if im just being unclear (ftr, i'm aware that you do this, so i know you understand what im talking about perfectly well). That said, i do appriciate you coming here and talking about it.. while none of the "powers that be" have done so.
It makes no difference whether an arb trader connects the markets in a single order or whether he recycles the same steem over and over. I hope this isn't your point of contention. Any selling he's doing in one place, he is buying the same amount somewhere else. The net sell or buy pressure from an arb trader is zero. If he's selling 10k Steem on Bittrex, hes buying 10k steem on Poloniex.
For any order that is being arb'd , it would be the same result if the owner of the original order had simply placed his order on these various markets himself, where the arbiter ultimately does. In fact, he would get a better price but the result is precisely the same as if the arbiter never existed. The only difference is that the Arbiter is doing this action for him and is taking the profit that would have been the savings of the original order had he done it himself.
That is normal and is exactly what should be happening. If the massive orders on an exchange are not enough to also fill the orders on these other exchanges then the price will not move up. The individual buying with massive volume on one exchange would be better off splitting his buy order on to all the different exchanges to get the best prices. If he is lazy, unable, or unwilling to do this. The arbiter will do it for him and profits the difference. But again, the result is the same. The arbiter has zero net affect on the price.