Common questions about arbitraging cryptocurrencies – Moneyweb.co.za

Anyone involved in commercial trading understands arbitrage: for example, buying oranges in Limpopo and selling them in Johannesburg at a higher price.

The problem with this example is that you have to add the cost of shipping the oranges to Johannesburg.

Arbitrage is the exploitation of price differences in the same asset on different markets. Bitcoin typically trades on SA crypto exchanges at 3-5% higher (sometimes more, sometimes less) than overseas exchanges.

Sharp-eyed traders have exploited this price difference for years. Using their R1 million discretionary allowance, they would ship dollars or euros to an overseas crypto exchange like Kraken to purchase bitcoin and then sell the same bitcoin on a South African exchange for a higher price, netting a quick profit – which at times has been as high as 25%.

As more people have entered the crypto market, that arbitrage profit has narrowed to around 3-5%, though has been as high as 9% earlier this year. Sometimes the arbitrage gap disappears altogether.

Arbitraging cryptos requires jumping through a few hoops: such as purchasing foreign currency, safely shipping it abroad to purchase crypto assets and then safely shipping it back to SA.

Jon Ovadia, founder and CEO of Ovex, saw an opportunity to open this market to ordinary retail investors.

“People who are familiar with cryptos and financial markets understand arbitrage, but the concept is a bit foreign to most people, so we decided to launch a service where we would handle all the logistics to purchasing cryptos offshore and then
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