Lesson

Where price spreads between exchanges come from

Prices are aligned by arbitrageurs who buy cheaper and sell higher. A spread lives where something gets in their way: a thin order book, closed withdrawals, capital controls, panic. We look at the causes of spreads on real cases — from a 95% premium on Upbit after a hack to a $300 ETH price gap between Binance and Hyperliquid.

AuthorAntonio MerklePublishedOctober 31, 20268 min read

If the same coin is cheaper on exchange A than on exchange B, someone will buy it on A, transfer it and sell it on B — and prices will move closer. That is what arbitrageurs and market makers do, and it is why BTC and ETH prices on major exchanges almost match. So every noticeable spread is a signal: something is preventing it from being closed. Let us see what.

Liquidity and the order book

On a thin market one large order moves the price by percent while nothing happens on the neighboring exchange. The spread appears instantly and disappears just as fast — or stays if there is not enough volume to close it. That is why large spreads in the screener are almost always on illiquid coins: the volume at the best prices there may be tens of dollars.

Closed deposits and withdrawals

If a coin cannot be deposited to or withdrawn from an exchange, nobody can move it across, and the local price breaks away from the global one.

• Upbit, November 2025. After a hack of about $32 million in Solana-network tokens, the exchange suspended deposits and withdrawals. According to CryptoSlate, ORCA traded on Upbit at a 95.6% premium over global prices, Meteora at 82%, Raydium at 46%. The arbitrage bots stopped — and prices diverged.
• Poloniex, December 2023. After a hack of more than $114 million the exchange froze deposits and withdrawals, then reopened TRX withdrawals first. According to CoinDesk, TRX traded on Poloniex at a premium of up to 17%. The outlet noted the risk: to capture such a spread you still have to withdraw money from an exchange that was just hacked.

Capital controls

If money cannot move freely into or out of a country, the local market lives by its own prices. The classic example is the “kimchi premium” on South Korean exchanges: foreigners can hardly trade there, and large transfers for arbitrage are restricted by currency controls. According to CoinDesk, in March 2024 the BTC premium on Korean exchanges reached about 10%, a two-year high. Only someone legally allowed to operate in both markets and move money between them can capture it.

Panic and liquidation cascades

In a crash, exchange infrastructure is overloaded, market makers disconnect, and prices on different venues live separately.

• On October 10, 2025, $3.21 billion of positions were liquidated in a single minute; according to Kaiko, visible order book liquidity fell 98%.
• According to a Bitwise portfolio manager, the ETH price gap between Binance and Hyperliquid that evening at times exceeded $300.
• On Binance, wrapped ether wBETH briefly fell to about $430 — 88% below ETH — and USDe to $0.65. Binance blamed infrastructure strain: market makers and arbitrageurs could not trade.

Such spreads are huge, but opening a position in those minutes means risking exchange outages, slippage and liquidation of one leg (lesson 8).

Indices, oracles and funding

Each exchange’s perp is pulled toward its own index. Binance’s index is built from about 15 venues; on Hyperliquid the funding price comes from an oracle — a weighted median of exchange spot prices published by validators every 3 seconds. Indices differ slightly, and funding rates vary between exchanges: where there are more longs, the perp trades a bit higher. This pushes the prices of one perp on different exchanges apart, but usually by fractions of a percent.

Different coins under one ticker

Sometimes a “spread” is not a spread at all: different projects trade under the same ticker on different exchanges. The price can be almost the same — in October 2026 we saw two different projects under the AI ticker with a price difference of less than 1%. The legs of such a setup hedge nothing. Before entering, compare the project name and token contract on both exchanges.

Hence the main takeaway of the course: the size of a spread says nothing on its own. First answer why it exists and what will make it close. For a dated future the answer is simple — expiry (lesson 3); for a cross-exchange perp there is none (lesson 4).

About the author

Antonio Merkle

Crypto expert, arbitrage trader and investor

Crypto expert and hands-on crypto arbitrage trader, investor and software developer with over 20 years of experience. On the P2P.Army blog he covers exchange news, P2P and cross-exchange arbitrage.

• Crypto arbitrage
• P2P arbitrage
• Cross-exchange arbitrage
• Crypto exchanges
• Investing
• Software development

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