Market Convergence

Market convergence is the process by which prices for the same asset across different venues align over time due to the activity of market participants. When a price discrepancy exists, traders move capital to the venue where the asset is undervalued, increasing demand and pushing the price up, while simultaneously selling on the venue where it is overvalued.

This collective behavior ensures that the market functions as a cohesive system rather than a collection of isolated islands. Market convergence is a primary indicator of market efficiency, as it demonstrates that information is being incorporated into prices across the entire ecosystem.

Factors that hinder convergence, such as regulatory barriers or extreme capital controls, can lead to persistent price gaps. For investors, monitoring the speed of convergence provides insights into the health and integration of the global crypto market.