Crypto Arbitrage Trading, Explained


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Yes – it’s the same concept, but with different strengths in play.

There are countless exchanges around the world now offering consumers the opportunity to buy crypto. But here’s the problem: There can be significant differences in the prices offered for digital currencies like Bitcoin (BTC).

Such inefficiencies normally occur in regions where cryptography is in high demand. One of the most often cited examples is the “Kimchi Premium” Here local merchants in South Korea ended up paying more for Bitcoin in USD than they would in the United States, Europe and even in other parts of Asia.

Zimbabwe is an African nation ravaged by hyperinflation – which means basic necessities such as food and fuel can become significantly more expensive within days, if not hours. There have even been instances in the past where locals have been forced to carry backpacks full of Zimbabwean dollars for shopping. In 2017, Bitcoin prices on a local exchange were almost double the prices quoted on international platforms in part due to the inability of affected consumers to access exchanges outside the country.

Bitcoin has also traded cheaply in Hong Kong amid the ongoing political turmoil. In August, traders paid 2% more per piece than elsewhere.

Even when extreme economic and political conditions are removed from the equation, price differences between exchanges can create conditions for arbitrage.

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About Chris McCarter

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