Skip to main content

Chinese market

  • Updated

Chinas arbitrage opportunity

China provides a unique arbitrage market. Cryptoassets typically trade at a 1% - 2.5% premium in South Africa for the following reasons: 

  • China has capital control on inwards and outwards payments in foreign currencies. 
  • China has banned all centralised cryptocurrency exchanges from operating in the country.
  • The combination of the higher demand and the difficulty of purchasing digital assets on offshore exchanges has created a persistent arbitrage gap. 
  • There are also limited exchange options catering for the local markets. Furthermore, these local exchanges do not have sufficient liquidity to create an equilibrium between buyers and sellers. Therefore, the buying demand always outweighs the selling demand, and cryptoasset prices trade higher. 

How does it work?

Crypto Arbitrage has spent a lot of time and effort establishing the operations needed to profit from the Chinese market. We have established local P2P relationships that allow us to buy and sell cryptoassets off-exchange in high volumes without pushing prices down. 

 

A typical arbitrage in the Chinese market works like this:

  1. We buy cryptoassets on an international exchange like FTX, Kraken, Coinbase Pro, Circle or Binance Institutional.
  2. We favour stablecoins like USDT, USDC, UST & DAI to protect against asset price fluctuation whilst transferring the cryptoassets to a South African exchange.
  3. We sell the cryptoassets/stablecoins on the Chinese market using P2P partner network. The benefit of using an P2P partners means we are not engaging with centralised exchanges, which are banned entities and illegal in China. 
  4. Crypto Arbitrage then completes a conversion from Chinese Yuan to USD and then transfer the capital back to Europe or America. It takes a day to approve the application and the funds to move back into USD.

What returns can you expect from this market? 

On average, profits in the market range between 1% - 1.5% per trade.

 

Trade.png