Bitcoin Price Anomalies: Peer-to-Peer (P2P) Trading on LocalBitcoins

Abstract

The authors study trading behavior on LocalBitcoins, an alternative platform to conventional exchanges that allow investors all over the world to trade Bitcoin on a peer-to-peer basis. In particular, the authors examine the anomalous trade prices on LocalBitcoins, which are settled at values significantly different from market prices. As LocalBitcoins is not regulated in the way some exchanges are regulated, the persistence of the anomalous prices suggests that traders may be able to take advantage of the phenomenon to make substantial gains.

TOPICS: Real assets/alternative investments/private equity, performance measurement, statistical methods