Bitcoin Market Feels “Too Efficient” As Arbitrage Opportunities Vanish – What It Means For Price?

As Bitcoin (BTC) tries to recover from its weekend sell-off that saw it almost crash to $100,000, some crypto analysts think that the BTC market likely “lost its pulse.” As a result, the leading cryptocurrency may be on the cusp of losing its bullish ￰0￱ At The Risk Of Losing Momentum? According to a CryptoQuant Quicktake post by contributor TeddyVision, Bitcoin’s Inter-Exchange Flow Pulse (IFP) has been trending lower, confirming that inter-exchange activity is slowly ￰1￱ Reading: Bitcoin Buyers Dominate On Binance As CVD Confirmation Nears 0.9, Signaling $130K Target Zone For the uninitiated, the IFP measures liquidity as it moves between crypto ￰2￱ essence, it can be considered a proxy to determine how active arbitrage and market-making really ￰3￱ explain, arbitrage refers to the practice of buying an asset for a lower price on one platform and selling it at a higher price on another, thus benefiting from the price ￰4￱ simple terms, arbitrage refers to profiting from ￰5￱ such inefficiencies exist in the market and are actually executable, liquidity tends to start moving ￰6￱ the same time, trading bots begin shuttling funds across platforms, market spreads begin to realign again, and the market starts to feel “alive.” This is when the IFP ￰7￱ there is greater market volatility due to a rising IFP, it is generally considered healthy for the market as it confirms that BTC is likely experiencing a bullish momentum.

However, since the IFP reading has turned lower in recent weeks, traders are finding it harder to arbitrage price discrepancies even though they might still be ￰8￱ noted: Price discrepancies still appear, but they’re harder to arbitrage – liquidity is thinner, latency is higher, and risk-adjusted opportunities are drying ￰9￱ find fewer setups worth taking, and less capital circulates between ￰10￱ analyst emphasized that liquidity is not leaving the market, it is just not circulating like ￰11￱ such a slowdown in liquidity does not crash the market, it does drain the energy out of ￰12￱ conclude, the market is not collapsing, it is just “too efficient” at the moment for traders to find any meaningful arbitrage opportunities that they can benefit ￰13￱ inefficiencies leave the market, the underlying asset is likely at risk of losing its momentum.

A Healthy Correction For BTC? The market crash on October 9 led to the largest single-day liquidation ever in the history of the crypto industry, totalling a mammoth $19 ￰14￱ the overall optimism has receded, some analysts are still hopeful of a quick sentiment ￰15￱ Reading: Bitcoin Forecast: $160,000 Target Possible If These 2 Conditions Align – Analyst Fellow crypto analyst EtherNasyonaL stated that BTC has maintained its upward trajectory despite the recent market crash, and that a move to a new all-time high (ATH) may be on the ￰16￱ press time, BTC trades at $111,731, down 2.3% in the past 24 ￰17￱ image from Unsplash, charts from CryptoQuant and ￰18￱