Written by Evan Francois, CEO and co-founder of Coygo Inc. which provides tools for professional cryptocurrency trading and information. A cryptocurrency advocate since 2010, Evan has years of experience as a software engineer in financial technology before quitting his corporate job to pursue a full-time business in the cryptocurrency and financials industry. digital assets.
Bitcoin and cryptocurrency arbitrage has changed a lot over the years. As more trading robots and institutions dabble in arbitrage, so does the strategy of trying to capitalize on profitable arbitrage opportunities. The big question that everyone is asking themselves is “are there still profits to be made?” And I’m here to tell you the answer is a definite yes, but you’ll have to work for it and use the right tools.
By the way, if you are curious about how crypto-arbitrage works, you can read more here: How exactly does crypto-arbitrage trading work?
How much profit can be made from bitcoin and crypto arbitrage in 2020
As I write this, I just saw a 0.36% spread (price difference) on the BTC-EUR trade pair if you were to buy on Kraken and sell on Binance, with an estimated profit of $ 15. Yesterday I saw a 0.4% spread with an estimated profit of $ 27 on the BAT-BTC trading pair.
Here are the types of spreads you can expect to find in 2020: price differences between 0.2% and 2.5%, with a possible profit estimated to be between $ 10 and $ 50. Profiting 10 spreads per day with an average profit of $ 15 would net $ 150 / day, or $ 1,050 per week. Of course, sometimes a bigger spread can appear, but this is what you will be able to find quite regularly.
If you are persistent and can grab profitable opportunities quickly, there is absolutely money to be made here. The examples I have given are only for spatial arbitrage (between exchanges), triangular arbitrage and other crypto arbitrage strategies also offer their own advantages and benefits. If you are trading cryptos by the day and the markets aren’t moving much, arbitrage can be a great tool in a crypto trader’s arsenal to make profits even when prices are stagnant.
Is crypto arbitrage easy?
Cryptocurrency and Bitcoin arbitrage is all about speed. Spreads may only exist for a few seconds or less, so you should be able to compare prices in real time between exchanges. When an opportunity arises, you need to be able to set up and submit transactions as quickly as possible.
For this reason, it is almost impossible to profit from crypto arbitrage in 2020 unless you use a tool to help you. The same can be said of crypto day trading in general: you will always need the right tools to help you with your job, whether it’s charts, arbitrage scanners, or whatever. All other traders use them, so you are at a disadvantage if you are not.
Isn’t the transfer between exchanges too slow?
When most people think of arbitrage first, they think of buying on one exchange, transferring to another exchange, and then selling there. It takes too long and doesn’t guarantee a profit, so it’s really not doable. By the time the transfer ends, the price difference may no longer exist. So, the type of arbitrage we are looking at here is where you hold the crypto on two exchanges at a time and submit the accompanying orders in parallel.
For example, in the BTC-USD market, you hold USD on Coinbase Pro and BTC on Kraken. When the price is lower on Coinbase Pro than on Kraken, you submit a buy order on Coinbase Pro to buy BTC with your USD balance, and at the same time you submit a sell order on Kraken to sell part of your BTC balance in USD. Because of the price difference, aka “spread”, you will have made a profit.
Another arbitrage strategy that doesn’t involve waiting for long transfer times is Triangular Arbitrage, which allows you to instantly fill a number of orders, all on the same exchange, and make a profit ( if you’re quick enough).
It works by exploiting the price differences between different pairs of transactions. For example, you can trade BTC for LTC, LTC for ETH, and ETH for BTC. In the end, you get back to your original BTC balance, but you made a small gain due to the price differences between the exchange rates. Since all of this happens on a single exchange, you are not likely to wait for transfer times.
What tools can help with Bitcoin and cryptocurrency arbitrage in 2020?
As mentioned above, you will really need a tool to help you with the process if you want to be successful in the arbitration. This is because you are competing with robots and other traders who are also using tools to gain an advantage. Fortunately, there are a number of options available for crypto arbitrage apps which all help to solve the problems encountered during arbitrage in their own way.
Coygo Terminal is a downloadable application for macOS, Windows, and Linux that provides a number of tools for a cryptocurrency or Bitcoin trader’s workflow. For arbitration, it supports real time crypto arbitrage scanner which calculates and displays the price differences on a number of exchanges and even calculates the estimated profit in US dollars.
When it comes time to submit trades, Coygo Terminal’s one-click trading helps you pre-configure your orders and allows you to submit associated buy and sell orders in parallel to both exchanges, so you don’t lose money. time to set up your orders and you can act on an arbitrage opportunity as soon as possible.
The Quick Transfer feature also simplifies the experience of transferring between exchanges by automatically obtaining the deposit address, prefilling transfer information, and displaying the estimated US dollar value of the transferred amount so you can easily tell if you accidentally entered the wrong amount.
Price (as of 6/2020): $ 17 / month, $ 155 / year
Coinigy is a web-based platform that allows you to view a real-time arbitrage matrix that compares the prices of any pair on a large number of exchanges, over 45 according to their website. This allows you to find spreads faster than if you were trying to find them manually, and the matrix style interface makes it easy to spot the best spread quickly.
Coinigy does support trading on some exchanges, but it doesn’t do much to help you submit arbitrage orders, so you’ll still have to manually set up your trades and submit two separate orders, which would take too long to complete. realistically capitalize on a gap. For this reason, it is mainly useful only for finding spreads and not acting on them.
Price (as of 6/2020): $ 18.66 / month billed annually, or $ 223.92 / year
ArbiTool offers a scanner that compares cryptocurrency prices on various exchanges to help find arbitrage spreads. It also displays useful information like market depth and coin transfer time, although as mentioned earlier the type of arbitrage you buy, transfer, and sell isn’t really viable these days, so the transfer time is not very convenient.
ArbiTool has a Trade Profitability Calculator to help determine if an opportunity is truly profitable after fees and the like, which is important in determining whether or not to try to act on an opportunity. ArbiTool does not currently support order submission, so its sole purpose is to help find discrepancies between trade.
Price (as of 6/2020): varies by number of users, currently $ 59.99 / month, $ 539.99 / year
More opportunities await you
It’s up to you to find the best arbitrage spreads and act on them, these tools will help you along the way but you should always be the one doing the work. There are still plenty of opportunities for the persevering, good luck!