Crypto arbitrage is a perfectly legal option around the world. You can buy cryptocurrency such as Bitcoin, Dogecoin, and Ugandan Knuckles Coin and trade them for profit. You can also buy cryptocurrency and sell them for other kinds of goods and services.
Even if you are a pro, there are some things you may not know about cryptocurrency yet. Bitcoin is the most popular cryptocurrency, which is also fluctuating nowadays. So, you have to know a few things before you decide to buy cryptocurrency.
What is Cryptocurrency? Definition And Overview
Cryptocurrency is not real money, but it is a form of money that people exchange online to buy products and services. However, when you first step into the world of crypto arbitrage, you will have to invest real money to access cryptocurrency. Therefore, the entire technology of this phenomenon is dependent on blockchain.
Blockchain technology, for which developers will use something like the best crypto api to build the applications that use blockchain, manages online transactions and ensures anonymous user identity when they pay or withdraw money. If you have ever been to a casino, you can grasp the concept of cryptocurrency well. First, you invest some money there to access the casino tokens. Then, you use those tokens to play the casino games. When you win or lose those tokens, it makes you win or lose some actual money. The crypto arbitrage world works the same way.
How is Crypto Arbitrage Storming in the World of Cryptocurrency?
Do you what is crypto arbitrage trading? It means you acquire profit margin from superficial price differences in different cryptocurrency exchanges. Now, the price difference varies in other countries. It primarily happens due to their currency value fluctuation or country-specific policies.
So, if you want to buy cryptocurrency using USD, it will cost you less money than if you’re going to buy it with ZAR. It means, if you are from South Africa, you will make more profit by purchasing cryptocurrency using USD in a foreign market and then sell it locally.
It looks like crypto arbitrage is indeed storming the world of cryptocurrency due to its high profit-generating mechanism. But are they safe for trading? There lies our dilemma because crypto arbitrage has a significantly high market volatility. Therefore, it could jeopardize the profit mechanism of trading cryptocurrency in different markets.
But we have its solution also. Due to the professional crypto arbitrage trading services offered by Ovex, we can buy cryptocurrency in a secure way even when the market value fluctuates. Ovex guarantees you a profit on your capital money no matter how inconsistent the international cryptocurrency market is. The fee to access this platform is also low because they charge only 1% of the arbitrage fee. Apart from instant withdrawals, and immediate settlements, Ovex also ensures less market risk. So, you can now buy cryptocurrency without a care in the world.
Why are Cryptocurrencies so Popular & What are their Benefits?
Cryptocurrency is a digital currency that is secured by cryptography. That is why it is impossible to counterfeit them. People also think of them to be the currency for the future. There are a few reasons that make cryptocurrency such as popular investment choice. The reasons are;
If you have even been a stock market player, you probably know why the cryptocurrency is so popular. People find the growth opportunity of cryptocurrency so lucrative that they end up investing in it. Their values indeed fluctuate sometimes, but mostly they are on the rise.
No Change in Market Value Due to Inflation
If we store money in banks, they may reduce its market value when there is a higher inflation rate in the market. Even most of the banks have a lower interest rate, which discourages people. So, the drawbacks of the banking sector have increased the popularity of crypto arbitrage. People think cryptocurrency can eliminate banks from the central role of the money supply.
Low Transaction Cost
The transaction cost for cryptocurrency is so low that it sums up to almost nothing. Even there are no restrictions on your daily purchases or withdrawals like the banks. So, it is a good investment option for people who happen to have daily transactions online.
Security in Transaction
People are also interested in buying cryptocurrency because the world of crypto arbitrage uses blockchain technology. This decentralized technology is the safest one in the market when it comes to online transactions. So, there is no chance that your account will be exposed to others when you pay using cryptocurrency.
How Does the Cryptocurrency Market Work?
When you open a position in the cryptocurrency market, you’ll have two options. If you want to stay open for the extended position, you’ll trade at the buy price. This price will be a little higher than the market price. However, if you want to stay open for a short-term position, you’ll trade at the selling price. Again, this price will be a little lesser than the market price.
There are approximately 1000+ cryptocurrencies on the market, but you can’t invest in every coin and also all of them are not good investments. Additionally, the APIs can assist you to check real-time crypto data to assist in building a trading bot, executing academic research on cryptocurrency. Here is the best crypto API for developers and investors in 2023 to use.
Five factors help in decentralizing the cryptocurrency market. So, if you want to buy cryptocurrency, you must know these.
Supply is the value of the total number of cryptocurrency coins that help you trade in the market. Even the rate at which these coins are lost, destroyed, or released is also considered the supply mechanism.
2: Market Capital
Market capitalization is the current valuation of all the cryptocurrency coins that exist in the market at present. Even the users also perceive the capital in different ways depending on their local currency value. So, market capitalization considers that viewpoint as well.
3: Media Coverage
Media outlets play a significant role in deciding the volatility of the cryptocurrency world. So if you want to buy cryptocurrency, you must keep a keen eye on its news updates. For example, when Elon Musk announced Tesla’s partnership with bitcoin, the cryptocurrency stock price increased overnight.
4: Market Integration
Cryptocurrency easily integrates into the existing financial infrastructure of the market like e-commerce. Therefore, people don’t have to undergo change to adapt to this technology, which is a plus factor for the crypto world.
5: Recent Events
Recent regulatory updates, currency value fluctuation, economic changes, and security breaches will decide the market volatility of cryptocurrency a lot.
Tips to Remember Before You Decide to Invest in Cryptocurrency
The legality of crypto arbitrage depends on individual nations. For example, if you want to buy cryptocurrency and trade with it, it is legal. But, in China, if you try to do the same, it is considered illegal. You should also consider what measures you should take so that you can protect yourself from its drawbacks. That’s why we have curated some tips to help you make your decision, such as;
- If you don’t have money to lose, don’t invest in crypto arbitrage. However, if you decide to buy cryptocurrency, make sure you stay aware of its risks too.
- Conduct thorough research on the phenomenon before you are thinking of investing in it. If you know someone personally who has experience in crypto arbitrage, make sure to collect their opinions.
- Don’t fall into the hype of cryptocurrency. If you have FOMO regarding this concept and want to buy cryptocurrency because you don’t want to lag behind the crowd, you are in it for the wrong reasons.
- Make sure you know who the company owner is if you are buying their products using cryptocurrency. If the owner and company website is identifiable, you can invest there.
- There are no tax consequences applied yet on the crypto arbitrage world. But, if you buy one bitcoin using $1, and its value doubles, and you spend that extra money to buy something, it applies to tax consequences.
- If you are a beginner in this world and want to buy cryptocurrency to check how things work, go for the fractions. You don’t need to buy a whole bitcoin. Just go for a small fraction of it that has a value of $10.
- You must know Elon Musk’s famous tweets about cryptocurrency. He sometimes loves them and sometimes hates them. So, don’t trust anybody’s opinion on cryptocurrency unless you verify it yourself.
If you have a CFD account, you can trade in the cryptocurrency market. You cannot take complete ownership of the cryptocurrency itself, but indeed you can speculate the rise change and fall in its value. You will get the predictions in your local currency so that it doesn’t confuse you.
Your decision to buy cryptocurrency must be your own ultimately. That is because you may gain a lot in it, but you also stand to lose a lot. So, until, and unless you are prepared about losing money, don’t invest in it. Don’t try to follow the hype.
Read every white paper research available on the subject and understand the legal concerns of crypto arbitrage. If you think cryptocurrency is something you would like to explore more about, you can always post your queries in the comment box.