Western and Asian Bitcoin exchange premiums and discounts

Abstract

Bitcoin has become more popular over time and it is in the media spotlight every week. As in any other industry, the biggest player in a certain market will be the one that dictates its future direction. Taking Bitcoin as an example, we can see that these large players are mainly located in the Asian and Western hemisphere, especially in China, Europe, and the USA. This research paper dives deeper into the Bitcoin mechanics, focusing on the financial side rather than on the technology behind the cryptocurrency, taking advantage of the daily data from the Bitcoin spot, futures, and perpetual swaps trades to provide statistical evidence for this discussion. All the data will be aggregated with the help of a model coded in Pine Script. The research findings conclude that there is indeed a relationship between Asian and Western exchanges premiums/discounts and local tops and bottoms in the Bitcoin market. Following this approach, we could use the model information to take advantage of the market and make short-term investment decisions