Cryptocurrency arbitrage

iCE3 & Cryptocurrency arbitrage opportunities

If you are an iCE3 exchange user, you will have noticed that they have recently added new coins to the exchange.

However, due to the new coins being priced in bitcoin, some users seem to be slightly confused. Users want to know why these coins can only be bought and sold in bitcoin. This blog post sheds some light on arbitrage opportunities in the #crypto world.

So, if you want to buy or sell on international exchanges which don’t use rand, read on…

What is crypto arbitrage?

Bitcoin arbitrage is the buying of bitcoins on an exchange where the price is very low and selling it on an exchange where the price is higher.

The prices of Bitcoin vary on exchanges because 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.

Let’s do an “example calculation” – The price of Bitcoin on your exchange is R650 and the price of Bitcoin on another exchange is R636, the difference between the prices is R14, and this is quite a decent opportunity for arbitraging. Let’s say, you buy 100 bitcoins on the other exchange at the rate of R636 each and subsequently, you sell them at Coinbase at the rate of R650 each, you make R14 per Bitcoin.

There are many different markets for the wide variety of crypto-coins. Any given coin will be offered at different prices across these markets. This page will you show you the best opportunities for doing such trades:

Register with multiple exchanges and never leave your bitcoin wallets on an exchange.

Is it worth doing?

If you have some extra BTC, or cash, then you’re welcome to try it yourself.  As long as you are careful, and set strict guidelines for when, and how, you will engage in this process.  Unlike speculation, margin trading, and other activities that can be viewed as market manipulation. In some cases it may even be truly harmful to the market as a whole, arbitrage is a positive process.

Overall, Bitcoin arbitrage may be an opportunity to make some passive income but at the same time, it has risks. Moreover, almost all exchanges have an API and these can prove to be very prosperous for you. Utilizing these APIs will give you the tools you need to create a custom arbitrage bot, or hire someone to do it for you.  Still, even attempting to arbitrage manually can be very beneficial, as long as you watch closely, and make sure you are placing simultaneous trades.

Make sure you sign up to sites who monitor opportunities like:

Here is an example of a trade I did between iCE3.COM and Bitstamp

I bought BCH on Bitstamp and Sold BTC. Then I went to iCE3 where Sold BCH and bought back the BTC on iCE3. All in all yielding a profit of around R530 (10/04/2018 price) in a matter of minutes.

Barriers to Bitcoin Arbitrage

  • Verification time of each transaction adds up, the exchange rate might change within that time frame.
  • Many exchanges require a lot of verifications in order to trade a large number of Bitcoins. 
  • Many exchanges have fees that you should take into account.
  • Look at transaction volumes on each exchange, you may not be able to sell all of the Bitcoin you bought.
  • Whenever doing arbitrage you need to have at least 10-1 liquidity on both sides. In other words if a trade will require 0.1BTC you need a balance of at least 1BTC on both exchanges.

Keep up to date with the latest #crypto news and predictions and what the future holds…

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Disclaimer Notice:

This article is intended to educate and should in no way be seen as investment advice or an enticement to use the platform. Bitcoin is highly volatile with big profit opportunities but you should also remember that you could lose part or all of your investment whenever you take part in any high risk investment. Bitcoin trading is not a regulated industry in South Africa, which in itself carries additional risks. IF YOU ARE NOT AN ASTUTE BITCOIN TRADER, SEEK INDEPENDENT FINANCIAL ADVICE BEFORE MAKING ANY INVESTMENTS.