The Extended Beginner’s Guide to Bitcoin Arbitrage today

 

Arbitrage in a pandemic time

During COVID-19, we are all expecting another lockdown, and in between, we try to feed our family, or just find an alternative to the work that we have to do remotely. Last time we talked about the fact that in 2019, new proposals for crypto arbitrage constantly appeared. Information oozed from each place about different offers and opportunities that promised a solid jackpot. We found out that the simple arbitration method is the best of the proposed ones in terms of conditions and entry speed.

Now we will try to remember what we talked about last time.

Simple Arbitrage

As the name implies, this is the easiest form of crypto arbitrage and one of the most common. You buy a particular cryptocurrency, such as Bitcoin, on one exchange at a low price and you sell the same cryptocurrency for a higher price on a different exchange.

Why Crypto Arbitrage Might Be Lucrative

There are many reasons why you might want to try crypto arbitrage, including:

• Quick profits. If everything goes according to plan, it’s a plausible way to increase your capital. At the same time, it’s all about speed so you might make money faster than with regular trades.
• Cryptocurrency markets are still young and volatile. Hence, most exchanges don’t share information and work on their own. Most cryptocurrencies experience many quick rises and sharp drops, which lead to price disparities and profitable arbitrage opportunities.
• There is less competition compared with traditional markets. Not every arbitrage trader is willing to give crypto a chance, which makes crypto space less competitive.
• Cryptocurrency price differences tend to range from 3% to 5%, and sometimes reach up to 30–50% (in extreme cases).

Consider popular and simple pairs

As we can see, everything is very simple, but this is just text. Why don’t we look at an example of several exchanges? The best pair of exchanges is, in my opinion:
· Binance.com — Bitniex.com pair, firstly, not such strict restrictions on KYC, and secondly, one of the maximum profits in the BTC / USDT pair (from 5 to 15 in the best cases).

· Huobi.com — Bitniex.com pair — Boasts ease of use and good percentages, but not as high as Binance.com

· Pair EXMO.com — Bitniex.com — One of the fastest pairs in our history. The percentage here is about the same as that of Huobi.com

Let’s get down to the math:

Number of Bitcoins bought in Binance.com — 10
Price of each Bitcoin — $18,829
Total expenses — $18,829 * 10 — $182,910
Number of Bitcoins sold on Bitniex.com — 10
Price of each Bitcoin — $11,645
Total revenue — $19,945 * 10 = $199,450
Total profit — $199,450 — $182,910 = $16,540

In each pair, the procedure is very simple, let’s take them step by step:

Step 1 — We register on both exchanges of the selected pair (if you find other exchanges and decide to use them, this is great, watch the courses, compare and analyze, your profit depends on this), as a rule, for this you only need an e-mail. Be sure to use Google Verification, safety comes first!

Step 2 — We buy a cryptocurrency on the first exchange of the selected pair, in our case, Bitcoin is best suited.

Step 3 — On the Bitniex.com exchange, go to the Assets tab and opposite the cryptocurrency you just bought, look for the “deposit” line, click it and thus get the wallet address that you need to enter on the first exchange by clicking on the withdrawal line

Step 4 — We wait until the funds are credited to the account of the Bitniex exchange, then we transfer funds from Funding to Spot

Step 5 — Open the Market and select the BTC — USDT pair, select the amount and sell funds for USDT (It is best to use Market Order)

Step 6 — Transfer the received USDT tokens from Spot to Funding

Step 7 — On the first exchange, opposite the USDT wallet, select the “deposit” line and repeat step 3

Step 8 — See Step 4

Thus, you can conduct several transactions and you will see how the amount of USDT will increase after each iteration. Why? This is the whole point of arbitration. The difference in rates we play on can bring good money. After you earn the amount you need, choose a withdrawal to fiat on the exchange of your choice

Why are we using USDT?

Tether ERC-20 (USDT) is the most popular stable coin at a cost equal to the US dollar at any rate of any cryptocurrency.

Is Arbitrage Illegal?

Arbitrage is completely legal as the only thing that is being done is exploiting price gaps between exchanges. A person conducting arbitrage is just buying and selling as any other trader would do.

What’s the easiest way to start arbitrage trading?

1. Look at the popular pairs described above and select the exchanges. Here are some invitation codes:
   Binance.com — 21863711
   Huobi.com — 8g399
   Bitniex.com —
   exmo.com — 950658
2. Register on the exchanges using promotional codes (this is not necessary, but it will help us to help you)
3. The recommended amount to start with is $ 1000