Crypto arbitrage and declining margins...

30.03.2021 17:16 Comment(s) By Mark Spies

Considerations for keeping crypto arbitrage profitable.

With what seems to be an ever increasing number of people climbing on the crypto arbitrage band wagon it was inevitable that previously lucrative margins would eventually be squeezed. It all boils down to the simple economics of supply and demand.

Lower margins, without doubt, make the process of arbitrage a much riskier proposition….previously it was all about how much profit you could make, whereas these days it’s more a case of can I actually make a profit!

So what now?

For those who can afford to lose their shirt, so to speak, playing in the arbitrage market still holds an attraction, but success now has a lot more to do with good timing, or perhaps more accurately…good luck.

If you’re a little more conservative and want to keep your shirt ,there are a couple of things you can do, to stay in the game. 

Firstly, you could sign up with one of the many companies that process the arbitrage transaction for you. You’ll obviously pay them a fee, but in return your risk reduces dramatically and you won’t have to sit in front of your computer for hours on end, waiting for things to happen. A word of caution here though - do your homework to make sure you’re dealing with a reputable outfit, before handing over your hard earned cash.

Another thing you can do is reduce your costs. Although there’s no real scope to negotiate to cut the fees charged by crypto exchanges or transfer fees levied by the banks, you can potentially do something about the cost of your foreign exchange. 

Typically, what you pay for foreign exchange is based on the margin that a provider applies - this is the difference between the “actual” exchange rate obtained from the market and the rate you’re quoted.

You could save yourself money by using the services of a fixed fee forex broker, like ourselves. With FX Rand you receive exactly the same exchange rate that we get from the market. Instead of loading the rate, or adding a margin we levy a small fixed fee for the service. This generally results in more foreign currency than the traditional approach would deliver.

FX Rand does not provide a platform for or advice relating to the purchase, sale or movement of crypto currency.  We facilitate foreign exchange and currency transfer services for this purpose, for private individual customers only.  All exchange control regulations and associated legislative requirements must be met in relation to capital outflows.
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