Post
Topic
Board Speculation (Altcoins)
Re: Does ETH movements depend on BTC ?
by
cutehoof
on 29/07/2018, 03:01:56 UTC
The existence of both Bitcoin and ethereum pairs with usd, AND the BTC/ETH ratio pair, create an incredibly easy arbitrage opportunity. It's because the ratio doesn't automatically change when one or both USD price changes, so sometimes they don't line up. Let's say that the ratio is .1, and a bunch of people buy just eth with usd, driving the usd price up. The actual USD price of eth divided by the USD price of btc changes, but the price on the ratio pairing doesn't change until people trade on it.

What this ends up meaning is that there are always opportunities to profit off of the inefficiency between both USD prices and the ratio. There are a lot of bots set up to do exactly this. So in order for one piece to rise or fall faster than the other, the trading volume on that coin has to be high enough beat the volume of the bots holding the price together.