Chris Camillo turned $20K into a staggering 21$ million dollars. All because he picked up on new social trends or cultural shifts before Wall Street did. Crypto Arbitrage is a little like that, but even easier!
Never mind that it took Chris 14 years to gather his fortune, and he lost his entire savings in his early trading career.
Traders became more astute, and more like Chris. With the crypto markets in its current state, it overflows with opportunity.
Crypto Arbitrage just like Market Arbitrage is a way of taking advantage of one of those opportunities.
From untradable to hundreds of exchanges
As we know, Bitcoin initially had zero value. Without a way to exchange it to fiat, it was just a commodity without value. Until October 5, 2009, when a service called the New Liberty Standard offered to sell and buy Bitcoin against a ratio of 1.309,03 btc to 1$.
They registered the first ever Bitcoin transaction against fiat on October 12, 2009 through PayPal where the New Liberty Standard bought 5.050 bitcoin for 5,02$.
A little less than a year later, the first official exchange with volume, price and buying positions appears.
Fast forward to today.
At the time of writing, there are over 500 cryptocurrency exchanges. Any exchange allows you to trade Bitcoin against Fiat, all over the world. The crypto markets have developed into the little brother of the stock markets.
There is hardly anyone professional trader left who hasn’t heard about crypto. Mainstream hedge funds are adding cryptocurrency to their portfolios. And even retail investors are turning their heads towards the crypto sphere.
Your chance to show your winning difference
If you haven’t been researching how to gain an edge over other traders, you haven’t been in the game.
Just like Chris Camillio making money as a trader is about gaining an advantage others don’t have. Whether it’s an informational advantage based on thorough research, a technical advantage based on your TA skills or using a crypto Trading Bot like Cryptohopper to gain the advantage for you.
Even if other people don’t see what you’re doing differently, you know where those gains come from.
And that’s more powerful than anything.
Is having fast fingers all there is to Crypto Arbitrage?
We’ve already established that the crypto markets are overflowing with opportunities. One of these opportunities might be using Crypto Arbitrage. It presents itself when a trader purchases an asset in one place and sells it in another to profit from the deviation in price.
Sounds simple, right? Raise your hand if you ever thought buying low in one place and selling high in another seemed like a brilliant idea. (I’m raising my hand)
James, can you not just go to Binance buy Bitcoin for $16.000 and sell it on Kraken for $16.020? And if it doesnt work isnt that just because you didnt do it fast enough?
Unfortunately, as appealing as it sounds isn’t quite that easy.
It is a strategy and it can obviously be used to create an advantage, but it’s not without risks.
To employ this strategy effectively and make consistently good returns, there are many things to learn.
There are some common pitfalls people should look out for when trading with Crypto Arbitrage.
- Projects with the same name
- Exchange wallets are offline or on a different blockchain
- High deposit and withdrawal fees
- Lack of volume
- Pump and dump schemes
- Trading fees
These are some of the obvious difficulties any trader might experience trying out this method.