Definition ∞ Token price divergence occurs when the price of a digital asset on one exchange or protocol differs significantly from its price on another. This discrepancy can arise from liquidity imbalances, network congestion, or inefficiencies in arbitrage mechanisms. It presents opportunities for traders to profit by buying low and selling high across platforms. Such divergence can also indicate market fragmentation or a lack of efficient information flow.
Context ∞ News reports frequently highlight instances of token price divergence, particularly during periods of high volatility or network stress. Discussions often center on the underlying causes and the effectiveness of arbitrage bots in correcting these discrepancies. Monitoring price divergence provides insights into market efficiency and liquidity across various venues.
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