Has crypto-arbitrage disappeared? – Cryptocurrencies TechCentral

Crypto arbitrage is where you buy crypto on an overseas exchange and sell it back to South Africa at a higher price (a premium), due to exchange controls. Currency Center has done so without a single loss since 2017, but a lot has changed in the past six months.

Since July, the gross premium has been down 50% compared to the first half. It is now averaging 0.9% (January to June averaging 1.8%). Although this is circumstantial and not permanent – and yet – very few traders can capitalize on this opportunity in these depressed market conditions.

Currency Hub, on the other hand, continues to trade most days, allowing you to use your full R10 million allocation and any remaining tax clearance certificates, generating consistent profits with zero losses (since its creation in 2017).

The causes of the drying up of the premium are the strong US dollar, weak rand, poor economic data and rising interest rates, causing stocks, bonds and cryptocurrencies to continue to sell. As long as the rand is at 18 rand/$, there remains uncertainty around the global economy, and bitcoin is trending below $20,000, this will continue to impact all markets and dry up the liquidity to perform the arbitrage trade with a higher premium.

“Given the state of global markets, this remains the best investment for a few hours of work. Even then, we return our clients around 20% in two to three months, or around R50,000 per person per year using full tax relief. – David Farelo, Head of Operations and Trading, Currency Hub

Thousands of South Africans have benefited from crypto arbitrage, but many remain skeptical of this unique investment strategy – its authenticity and financial rewards with relatively low risk. Yet a company regulated by the Financial Sector Conduct Authority like Currency Hub with a Reserve Bank approved forex intermediary license has matured into the oldest and most regulated arbitrage provider, having never suffered loss on over 30,000 trades since 2017. This is pure arbitrage, leveraging two financial services licenses unique to Currency Hub’s actively traded arbitrage strategy.

While the premium has fallen from 30% to around 1% in five years (as you would expect from an arbitration), it’s not all gloomy, especially if you’re sitting on a pile of tax clearance certificates waiting for the bounty to open. However, you have to take into account that this could be the new norm for the next three to six months, so swap instead and do something about letting all your hard work and FIA allowance go to waste.

Currency Center can help with all FIA requests, with a generation history of over 10 approvals each month.

Over the past three months, Currency Hub has been trading intermittently and will use them as a proxy for the next three to six months, but now we will be trading the lower premium more actively. As such, Currency Hub has reduced its exchange fees by 50% for the remainder of the year to ensure clients the highest premium in this current market and it’s all worth it. Currency Hub pegged the exchange rate at 0.25% for the rest of the year. These are the only fees, and the arbitration itself is always done free of charge (no performance fees).

With only two months left in the year, Currency Hub encourages its clients to redeem their allocations and any remaining Sars Pins before January 1, when the cycle resets for the new year. Arbitrage still offers great returns – far better than cash and stocks. Consider that R250,000 sitting in the bank for three months will only get you about R3,700 compared to what that money could do instead (probably accessible from your deposit).

Currency center example client profits in a low premium market (exchange with R250,000 recommended)

Gross premiums R1m SDA Customer Benefits FIA customer benefits of R10 million Total customer benefits
0.70% R2,500 R25,000 R27,500
0.80% R3,500 R35,000 R38,500
0.90% R4,500 R45,000 R49,500
1.00% R5,500 R55,000 R60,500

What is Currency Hub doing differently than other providers in the space, to ensure clients get consistent returns in an environment where the premium isn’t as high as it was a few years ago?

There are two elements to Currency Hub’s arbitrage business, which ensure that it provides the best service to its clients:

  1. Currency Hub is the intermediary forex provider, so it facilitates all forex payments from its customers to buy the offshore cryptocurrency in-house. This means they are not paying a third party forex provider to do this for you. Most competitors can only trade two days a week due to the outsourcing of this crucial function.
  2. Currency Hub hedges its clients’ transactions and uses institutional lines of credit. This is essential as it means they can buy and sell the cryptocurrency simultaneously and clearly see the profits available before committing to the trade, hence yields consistent with zero losses since 2017…pure arbitrage.

Please visit the Currency Hub website at www.currencyhub.co.za. We have account managers and FIA specialists who will contact you, or you can register directly on our website and we will take care of it from there.

Disclaimer: Currency Hub is a licensed Financial Services Provider (FSP 50850) and SARB Licensed Foreign Exchange Intermediary (6176). For “unregulated cryptocurrency” cases, Currency Hub provides a forex intermediary service, without any financial advice, under the FSCA, SARB and Currency and Exchanges Act.

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About Terry Simmons

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