In SA’s fast-growing crypto market, arbitrage is an excellent way for newcomers to make a start.
Arbitrage is the exploitation of price differences in the same asset on different markets.
Here’s how it works: last week you could buy bitcoin for €13 000 on the Kraken exchange in Europe and sell it on the Ovex exchange in SA for €13 500 (R249 000). That’s a price difference of slightly less than 4%.
That’s a profit of about 4% you could have banked in a matter of hours.
In order to do that you would have to purchase euros from your local bank and ship it off to Kraken, purchase the bitcoin and then ship it back to Ovex. To complete this transaction you would have to open accounts at both Kraken and Ovex.
South Africans are able to do this arbitrage using their annual discretionary allowance of R1 million, plus their investment allowance of R10 million. That’s R11 million per year per person. Assuming an average 5% arbitrage profit, that comes to R550 000 per year.
That’s as close to risk-free as you can get, and it’s legit.
Ovex was the first South African crypto exchange to develop a fully automated system for exploiting this arbitrage opportunity. Instead of doing it with bitcoin, it partnered with Trust Token, a San Francisco-based ‘stable coin’ platform with a market cap of nearly $500 million that allows users to buy cryptocurrency offshore at the international price, without ever having to leave Ovex.
All the logistics of shipping foreign currency abroad