Network analysis on Bitcoin arbitrage opportunities: Daily graphs
Network analysis gives a clear view of which exchanges are the leaders and intermediaries in the market. Our analysis of IN and OUT values showed which exchanges were the most attractive for buying and selling Bitcoin. Evaluating selling and buying opportunities enables market participants to be prepared by having money available in the appropriate exchanges when opportunities to buy or sell Bitcoin arise. First, we measured the betweenness coefficient to assess the exchange intermediaries. High values on this measure indicated that exchanges were mainly responsible for distributing market information. The next step was to evaluate the daily changes in the relationships between exchanges. These were measured by calculating IN and OUT coefficients to show incoming and outgoing signals. Nodes represent a specific exchange and each has incoming and outgoing arrows. Here we provide our results for 455 days starting from 2019-01-01 until 2020-03-30. Each figure reflects the network results for that day. As shown in Figure called "2019_01_07", this network has well-separated nodes representing the different exchanges. Arrows pointing to the exchange show IN values, meaning it is possible to successfully sell Bitcoin in that specific exchange. In contrast, OUT values show outgoing signals from the exchange. In this case, if Bitcoin was bought in the dsx exchange, it could be successfully sold to the other exchanges to which the arrows point (bitstamp, bitmarketlt, coinfalcon and others).