The global supply and demand relationship constitutes the fundamental pricing logic. The daily new supply of Bitcoin is fixed at 900 units (with a block reward of 3.125 BTC after halving), but the net inflow of Bitcoin to Canadian exchanges fluctuates significantly: Data from the Bitbuy platform in 2023 shows that when the daily Canadian dollar deposit exceeds 8 million CAD, the premium rate of Bitcoin against the Canadian dollar usually increases by 0.4%. In contrast, during the LUNA collapse in 2022, the weekly withdrawal amount of Canadian users soared by 270%, causing the local quote to be discounted by up to 1,200 CAD compared to the international average price. The mining cost also provides support. Currently, the comprehensive Bitcoin mining cost of Canadian mining company Hut 8 is approximately 38,000 CAD (electricity accounts for 60%). When the market price drops below this threshold, the selling pressure of miners can be reduced by more than 200 BTC per day.
Regulatory policies have triggered a momentary price gap. In 2022, Canada’s “Cryptocurrency Asset Trading Reporting Regulations” required exchanges to freeze the assets of unregistered users. On the day the new regulations came into effect, the domestic trading volume dropped sharply by 43%, causing the bid-ask spread of Bitcoin against the Canadian dollar to expand to 300 CAD. More crucially, there is the tax policy: The Canada Revenue Agency (CRA) regards cryptocurrencies as commodities, and short-term trading is subject to a 50% capital gains tax. An Ontario audit case in 2024 revealed that an investor made a profit of 15,000 CAD after selling 1 Bitcoin, but the actual after-tax gain was only 7,350 CAD, with an effective tax rate 23 percentage points higher than that of US stock trading. The current compliance costs vary by 15% among provinces, and the operating rate of the Alberta Exchange is 0.3% lower than that of Quebec.
The volatility of the Canadian dollar itself amplifies the exchange rate deviation. The correlation between the Canadian dollar exchange rate and the WTI crude oil price is 0.72 (data from 2019 to 2024). When crude oil prices rise by $10 per barrel, the Canadian dollar typically appreciates by 2.3%. However, in 2023, the Bank of Canada continuously raised interest rates to 4.75%, leading to a tightening of liquidity in the Canadian dollar. As a result, the 90-day volatility of Bitcoin against the Canadian dollar rose to 55%, which was 18 percentage points higher than that denominated in US dollars. Especially during the forest fire crisis in April 2024, the Canadian dollar depreciated by 1.8% in a single week, causing the Bitcoin quote to passively rise by 2,100 CAD. Cross-market arbitrage data shows that whenever the exchange rate of the US dollar against the Canadian dollar breaks through the 1.36 mark, the cross-border arbitrage robot will complete the price difference correction within 240 seconds, generating an average instantaneous retaliatory rebound of 470 CAD per Bitcoin.
The difference in transaction depth generates frictional premiums. The average daily trading volume of the Bitcoin/CAD pair on the Toronto-based exchange Bitvo is approximately 28 million CAD, which is only 0.6% of the Coinbase USD market. Insufficient liquidity leads to significant slippage in large orders: The actual test in Q1 2024 shows that a single order of 500,000 CAD will increase the immediate quote by 1.2% (approximately equivalent to a 600 CAD premium). During the maintenance period of the Canadian payment network (such as the Interac system upgrade in November 2023), local deposit and withdrawal delays reached 7.2 hours, and at this time, over-the-counter (OTC) quotations deviated from the exchange average price by up to 4.5%. It is recommended to use the real-time updated 1 bitcoin to cad data stream to monitor the micro-liquidity changes. When retail investors execute orders below 10,000 CAD, they should give priority to choosing the pending order pool with a depth of more than 100 BTC.
The cycle of technological innovation triggers periodic disturbances. The Bitcoin halving event occurs every four years. The most recent one was in April 2024, when the block reward dropped from 6.25 BTC to 3.125 BTC. Historical data shows that the average inflation rate decreased by 40% in the year of the halving. However, Canadian mining farms are thus facing equipment updates: Bitfarms purchased 17,000 Antminer S21 mining machines (each with a power of 3,352W) in 2023. After adding the 0.08CAD /kWh electricity price in Quebec, the overall network computing power increased, raising the mining difficulty by 25%. The development of Layer 2 also affects the demand side. In June 2024, the capacity of the Lightning Network exceeded 5,500 BTC (approximately 1.925 billion CAD), reducing the average transaction fee for cross-border payments in Canada from 7.3 CAD to 0.02 CAD and driving the commercial adoption rate to increase by 12% quarter-on-quarter.