Bitcoin just hit its all-time high. But that number remains up for debate

Meanwhile, Coinbase announced that Bitcoin surpassed its 2021 high a whole day earlier, declaring the moment to be when it hit $65,565.75—based on what the exchange considers the previous record, about $64,000—before it shot up to $69,225.37 on Tuesday.

But these figures contradict those of CoinGecko, Binance, and CoinDesk, which declared slightly differing highs on Tuesday: $68,912.84, $68,816.59, and $69,000 respectively.

The question is: why? One basic explanation is that unlike, say, gold or real estate, there isn’t a common way to price Bitcoin because it lacks intrinsic value—the price is determined solely by trading.

But in this case, the key reason for price variation is that Bitcoin is traded on many centralized exchanges with differing levels of liquidity. The largest exchanges, like Coinbase and Binance, boast vast trading volumes of over $33 billion and $9 billion, respectively, compared to a plethora of minuscule alternatives with volumes as low as $21, according to BitDegree data. And put simply, trading volume (supply) affects the asset’s value. On top of this, varying gas fees on each exchange’s transactions can also have a subtle impact.

As Bitcoin moves across a sprawling number of exchanges, it’s harder for traders to arbitrage price differences, which means the discrepancy persists for longer in the system compared to more efficient, traditional markets.

And for traders looking to capitalize on those differences, arbitrage opportunities have diminished. For instance, spreads across exchanges in 2020 often hit 4%, according to CoinCodeCap. However, today, the largest spread between market leaders Coinbase, Kraken, Gemini, and Binance was between Binance and Kraken, with the…