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Cryptocurrency Arbitrage – Road to Glory

Crypto arbitrage veterans will remember the exhilarating days in 2017 when you could bank a 20% or even 30% profit in a day by buying bitcoin on an overseas exchange and selling it at a higher price in local exchanges.

Imagine being able to do that twice in a single day. Of course, the arbitrage premium has narrowed significantly since then to around 3% to 11%, but there have been days when the profit potential rises to 12% or even 14%.

On days like that, arbitrage traders would love to cycle through as many trades as possible, booking profits of 4% to 8% each time.

That’s theoretically possible, but practically difficult because of the need to purchase Bitcoins with fiat for each trade and wait for the best possible rate, which takes several hours.

The Financial Centre has cracked the holy grail of more than two arbitrage trades in a day, and it’s a big deal.

“The reason this is a big deal is that investors can only do so much crypto arbitrage in a year,” says The Financial Centre Chief Investment Officer David Green. “Private investors are always on the looking for a professional to guide them and lead them to financial security. On days when the arbitrage premium is 4% or higher, clients can book two trades or more in a single day – and see evidence of the profits in their accounts within hours.”

Being able to complete two arbitrage trades in a day allows The Financial Centre to maximize profits on days when the arbitrage gap is high.

Optimizing processes

How is this done?

“We had to focus on those things in the arbitrage trade that we can control. We optimized our operational procedures and removed time-consuming barriers, such as the buying and depositing process. We sell Bitcoins OTC on behalf of the client and that lands within minutes,” says Green.

The profits from the first trade of the day will appear in the client’s account at or before midday, allowing for a second bite of the apple in the afternoon, when the exact same procedure is followed. It may happen that the arbitrage premium has narrowed significantly or disappeared in the afternoon, in which case no trade will occur. The Financial Centre will wait for another day when the arbitrage premium widens.

Fully hedged trades

A key feature of the Financial Centre arbitrage is that it is fully hedged – meaning the client is not exposed to any adverse movements in bitcoin prices. “Using our own balance sheet and our access to liquidity providers, we are able to lock in arbitrage profits,” says Green.

Clients can nominate their desired profit target

A unique aspect of the Financial Centre arbitrage offering allows clients to choose their minimum net profit range. For example, where clients select a target net profit of 2%, the Financial Centre will not execute a trade until the arbitrage gap is wide enough to cover its own costs and deliver a 2%-plus profit to the client per trade.

Green points out that completing two trades in a day will not always be possible due to circumstances beyond its control – such as the speed of the banks’ Swift system which can often be the cause of delays.

“There are some things we can control and some things we cannot. But completing two arbitrage trades in a day is our target, which can significantly improve clients’ total profit for the year,” says Green.

Costs

Clients need a minimum of 1 unit of Bitcoin to take advantage of the service.

About the Financial Centre

In addition to its arbitrage service, the Financial Centre provides a platform for its users to buy and sell more than 40 cryptocurrencies and offers a cross-border payment service with same-day settlement. It also operates an over-the-counter (OTC) desk for private clients to conduct large volume crypto transactions.