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Does Cryptocurrency Arbitrage Work

The Case For Never-ending Cryptocurrency Arbitrage Spreads

The Case For Never-ending Cryptocurrency Arbitrage Spreads

People, software and process. The Case For Never-Ending Cryptocurrency Arbitrage Spreads I launched Token Spread in Oct 2017. The project came out of my adventures with different arbitrage strategies in the crypto markets. Two things have happened since the launch of Token Spread, 1) arbitrage spreads have been extremely consistent, and 2) the crypto space has continued to expand at a rate that melts my brain. When I put my head down for a couple weeks to work on new features (like Telegram integration for our spread alerts ), I pop my head back out and it feels like the crypto world has passed me by all over again. In many conversations about arbitrage, there seems to be a common opinion that arbitrage spreads will continue to tighten over time and/or disappear (i.e. be unattainable for the everyday trader). However, the distributed nature of cryptocurrencies and the natural interplay between availability, security, regulation and anonymity will continue to create persistent market inefficiencies. I am confident that arbitrage opportunities will continue indefinitely due to the following: 1) Staggering regional competition between exchanges. There has been a gross proliferation of trading exchanges. Regional interests and trends continue to result in predictable arbitrage opportunities and inefficiencies. At present, the top 10 exchanges on CoinMarketCap based on volume are listed below. This list has changed a lot in 24 months. It will continue to be a revolving door. The current BTC/USD spreads on Token Spread are: 2) Inability of exchanges to keep pace withdemand. Kraken was recently down for 48+ hours while upgrading their trading platform. This is what response times look like post-upgrade: This is not meant to pick on Kraken, a company that has raised millions i Continue reading >>

Bitcoin's 43% Arbitrage Trade Is A Lot Tougher Than It Looks

Bitcoin's 43% Arbitrage Trade Is A Lot Tougher Than It Looks

Bloomberg the Company & Its Products Bloomberg Anywhere Remote LoginBloomberg Anywhere Login Bloomberg Terminal Demo Request Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world. Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world. Bitcoin's 43% Arbitrage Trade Is a Lot Tougher Than It Looks Prices in Korea are consistently higher than those elsewhere Local foreign-exchange rules have made profiting difficult Bitcoins arbitrage trade is more difficult than it looks. Bloombergs Julie Verhage reports. Its the kind of market anomaly that savvy traders usually devour in fractions of a second: bitcoin prices in South Korea are 43 percent higher than those in the U.S. Arbitrage 101 says buy in America, sell in Korea, and pocket the difference for a risk-free profit, minus transaction costs. Market participants whove studied the price gap, known locally as the kimchi premium, say Koreas foreign-exchange and anti-money-laundering rules are making it difficult for traders to gobble up the proverbial free lunch. The lack of selling pressure from arbitragers has left bitcoin prices in Korea tethered to the whims of the nations individual investors. The resulting boom has alarmed local authorities and underscored how fractured markets and feverish speculation can lead to strange outcomes in the nascent world of cryptocurrencies. It also helps explain why Coinmarketcap.com, a widely followed provider of data on digital currencies, excluded Korean exchanges from some of its pricing calculations this week. Continue reading >>

Looking For Bitcoin Arbitrage Opportunities? Read This First

Looking For Bitcoin Arbitrage Opportunities? Read This First

Looking for Bitcoin Arbitrage Opportunities? Read This First By Sean Ross | September 7, 2016 3:00 PM EDT If you are an investor or a digital currency aficionado, you may have heard about a bitcoin-trading technique known as exchange arbitrage. The theory goes that, because bitcoins are bought and sold on many different exchanges and sometimes at many different prices, it should be possible to buy relatively undervalued bitcoins and sell them at exchanges where they are relatively overvalued. While there is a lot of information on the web about the opportunities of bitcoin arbitrage, you need to clearly understand the obstacles and challenges involved. Arbitrage is the term for when an investor buys and then quickly sells an asset in order to profit from a difference in prices. It is a simple and important process that helps prevent assets from being over- or under-priced in different markets. For example, suppose you could purchase shares of The Coca-Cola Co. (NYSE: KO ) for $50 in New York and then sell them on the London Stock Exchange for $60. In this circumstance, the investor would earn a risk-free $10, or 20% profit, on the trade. Similar logic can apply to bitcoin exchanges, such as Bitstamp, Bitfinex or Bitcurex. If you could purchase one bitcoin on Bitstamp for $465 and then immediately sell it on the Bitcurex market for $470, it appears that you could make a $5 profit with no risk. The price of Bitcoin arbitrage cannot function in exactly this way because of challenges in the bitcoin exchange model, but this is the essential method. How to Find Bitcoin Arbitrage Opportunities Classic arbitrage opportunities in currency markets involve taking out a short position in one exchange and then going long on another, simultaneously using the long account to transfer Continue reading >>

Is Bitcoin Arbitrage (buy Them On One Exchange At A Certain Rate And Sell Them On Another Exchange At A Higher Rate) A Feasible Trading Strategy? If Not, Why?

Is Bitcoin Arbitrage (buy Them On One Exchange At A Certain Rate And Sell Them On Another Exchange At A Higher Rate) A Feasible Trading Strategy? If Not, Why?

Is Bitcoin arbitrage (buy them on one exchange at a certain rate and sell them on another exchange at a higher rate) a feasible trading strategy? If not, why? TL;DR: Yes, very much so. I created a tool to find these mismatched prices, and outline the strategy, and pitfalls of crypto arbitrage. You can find the tool here , but I recommend reading the full outline below. Crazy stat of the day: You can trade cryptocurrencies on over 170+ different exchanges throughout the world. Compare this to the stock markets in the United States which have a whopping2. You know them very well by now (NYSE and Nasdaq), but these markets have had decades of consolidation and mergers. While this is not an apples-to-apples comparison, cryptocurrency exchange consolidation is a natural market force that will happen eventually. However, we do not know if this will take months, yearsor even decades. The abundance of choices in exchanges presents a multitude of problems, one of which is a large distribution of prices across all platforms. New markets such as cryptocurrencies all experience the following problems: These problems exist due to imbalances in supply and demand. If there is a lack of sellers or buyers, the problems mentioned above are enhanced. Complicating the matter even further, each pricing discovery process is silod within each different exchange. Smart arbitragers recognize this as an opportunity, and they specifically hone in on #2: Differences in prices. When buyers are able to capitalize on differences in prices between markets, this is known as arbitrage. You have been following the price of a certain coin (we will just call it coin for this example) for a while. One day while looking at prices, you noticed that on exchange #1 the price of coin was trading at $95. Simulta Continue reading >>

Bitcoin And Cryptocurrency Market Ripe For Arbitrage

Bitcoin And Cryptocurrency Market Ripe For Arbitrage

A bitcoin (virtual currency) coin placed on Dollar banknotes is seen in this illustration picture, November 6, 2017. REUTERS/Dado Ruvic/Illustration Bitcoin hit $10,000 on a South Korean exchange on Tuesday morning but was trading at $9,748 on US exchange at the same time. Price disparity sign of "incredibly immature market," an analyst says, and makes market ripe for arbitrage. LONDON - Has bitcoin hit $10,000 yet? It depends on who you ask. The cryptocurrency hit the symbolically significant level on some South Korean exchanges early on Tuesday morning but, as of 1.30 p.m. GMT (8.30 a.m. ET), it has failed to clear the level on most Western exchanges. The mismatch highlights the huge arbitrage opportunity in cryptocurrency markets, which remain diffused, unregulated, and disjointed. Neil Wilson, a senior analyst with ETX Capital, said in an email on Tuesday: "When [South Korean exchange] CEX quoted BTC at $10,026, [US exchange] Kraken had it at $9,748 - a gap of $278 - a near 3% spread." It's not the first time this kind of disparity between exchanges has occurred. Back in May, Bitcoin was trading at the equivalent of $2,500 on Japanese exchanges while it was priced at $2,100 on US exchanges. Charles Hayter, the CEO and founder of CryptoCompare, highlighted arbitrage opportunities in an email at the time and said: "The Japanese have caught the Bitcoin bug and inefficiencies across markets are being exposed." In most financial markets, this kind of asset price gaps would generally be closed in minutes or even seconds as algorithmic trades buy up the lower priced asset to sell on the exchange offering a higher price. This spike in buying pushes up the price of the cheaper asset until it is on a par with the higher price. There are some fundamental reasons for the price Continue reading >>

A Super Simple Cryptocurrency Arbitrage Spreadsheet For Finding Mismatched Prices

A Super Simple Cryptocurrency Arbitrage Spreadsheet For Finding Mismatched Prices

Founder, Spreadstreet.io. Husband to the most beautiful woman in the world. Runner-up in 6th grade spelling bee. Super-nerd. A Super Simple Cryptocurrency Arbitrage Spreadsheet for Finding Mismatched Prices Crazy stat of the day: You can trade cryptocurrencies on over 170+ different exchanges throughout the world. Compare this to the stock markets in the United States which have a whopping2. You know them very well by now (NYSE and Nasdaq), but these markets have had decades of consolidation and mergers. While this is not an apples-to-apples comparison, cryptocurrency exchange consolidation is a natural market force that will happen eventually. However, we do not know if this will take months, yearsor even decades. The abundance of choices in exchanges presents a multitude of problems, one of which is a large distribution of prices across all platforms. New markets such as cryptocurrencies all experience the following problems: These problems exist due to imbalances in supply and demand. If there is a lack of sellers or buyers, the problems mentioned above are enhanced. Complicating the matter even further, each pricing discovery process is silod within each different exchange. Smart arbitragers recognize this as an opportunity, and they specifically hone in on #2: Differences in prices. When buyers are able to capitalize on differences in prices between markets, this is known as arbitrage. You have been following the price of a certain coin (we will just call it coin for this example) for a while. One day while looking at prices, you noticed that on exchange #1 the price of coin was trading at $95. Simultaneously at exchange #2, coin was trading at $100. Being that you are a smart cookie, you decided to do the following: The crazy thing is, these market inefficiencies Continue reading >>

Bitcoin Arbitrage Opportunities: A Short Guide

Bitcoin Arbitrage Opportunities: A Short Guide

Last updated on May 23rd, 2017 at 03:08 am Bitcoin arbitrage is the buying of bitcoins on an exchange where the price is very low and selling it at an exchange where the price is relatively higher. The prices of Bitcoin vary on various exchanges, due to the fact that the markets are not directly linked, and the trading volume,on many exchanges, is low enough that the price does not adjust to the average right away. Here a great video by Andreas Antonopoulos about why these arbitrage opportunities even exist: A Simplified Example of a Bitcoin Arbitrage Opportunity The price of Bitcoin on Coinbase is $650 and the price of Bitcoin on BTC-E is $636, the difference between the prices is $14, and this is quite a decent opportunity forarbitraging. Lets say, you buy 100 bitcoins on BTC-E at the rate of $636 each and subsequently, you sell them at Coinbase at the rate of $650 each, you make $14 per Bitcoin. Lets get down to the math Price of each Bitcoin = $636 Total price = $636 * 100 = $63,600 Number of Bitcoins sold in Coinbase = 100 Price of each Bitcoin = $650 Total = $650 * 100 = $65,000 Total profit = $65,000 $63,600= $1,400 Thus, you can see that Bitcoin arbitrage seems like a wonderful opportunity to make some passive income, but there are afew barriers to it. The time it takes to verify each of the transactions (buying and selling) can add up and the exchange rate might change within that timeframe. Many exchanges require a lot of verifications in order to trade a large number of Bitcoins. Depositing fiat currency can be a time taking process (can take up to 10 days depending on your payment method). Many exchanges have fees, which I have overlooked in the given example, that you should take into account. Pay attention to the transaction volume on each exchange as you Continue reading >>

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