[dustingetz]

I saw some blogs theorize that nefarious bots are also increasing apparent spread—e.g. painting the tape on gdax to skim from coinbase cash whales—and so little of the everyday trading activity is human, that if you try to arb it, all of a sudden the spread disappears. It even makes sense that the entity responsible for this website is trying to combat effects like this by driving the spread down. What reasons can you think of for someone to make this website?

[wc-]

GDAX bot activity is all: speculative automated trading, arbitrage, or (and most importantly) coinbase's own activity on the gdax exchange. They have to fill orders for all their customers clicking the buy button on their iphone apps. 100k new customers A DAY were seen at bitstamp, the coinbase app was the #1 app in the appstore, that is a lot of retail buying activity. Those buys are then passed to traders / bots that fill them on the exchange so I get that it looks automated and one-sided.

"if you try to arb it, all of a sudden the spread disappears" - well there's a lot of people trying to do the same thing because they think it is easy money and no one has thought of this great idea of buying LTC on one exchange and selling on GDAX, so when your incoming transfer of LTC completes so do a bunch of other transfers all doing the same arb trade (and those are automated and will beat you in the race).

The blogs you are referring to I do not hold in high esteem. I maintain high levels of doubt about exchanges as a whole and realize the extremely high counterparty risk more than most in the space, but their ideas about painting the tape and nefarious bots are misguided at best.