Why is this a bad idea?
I have an interesting trade idea. I have been thinking about this for a while and I know there must be something I am missing (based on the rule of if it is too good to be true it probably is) but I cannot figure out why. Why is this a bad idea?(figures are arbitrary)
Let considering two crypto exchanges with 100 million and 10 billion in liquidities and the price of BTC is 60k respectively. Exchange A is the smaller one and exchange B is the bigger one. Let's says I buy 50 million dollars for bitcoin from both exchanges. In exchange A (unless it is using an OTC provider) the price impact would be over 100%. I move my bitcoins from exchange B to exchange A and sell them. The price returns back to the original but I sell at a price of around 100k+. Then I take the 50 million dollars in BTC in exchange A and move them to exchange B because exchange B has lot more liquidity the price impact is almost none, I move the bitcoin there and cash in at the original 60k price. So I sell half of the 100 million at 100k+ in exchange A and sell the other half at almost the same price. Making money using differences in liquidity pools. Is this possible?
Edit: I do know about arbitrage and how competitive it is. I am talking about creating the arbitrage opportunity ourselves to position ourselves ahead of bots.
submitted by /u/Sensitive_Echidna370
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