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Bitcoin’s 50% Arbitrage Trade Is a Lot Tougher Than It Looks
Bitcoin’s 50% Arbitrage Trade Is a Lot Tougher Than It Looks seen by FxPremiere Group Analysts.
It’s the kind of digital market anomaly that savvy traders usually see as devour in fractions of a second: bitcoin prices in South Korea are 50 percent higher than those in the U.S.
Arbitrage 101 says buy in America, sell in South Korea, and pocket the difference for a risk-free profit, minus transaction costs.
Digital Market participants who’ve studied the price gap, say Korea’s foreign-exchange and anti-money-laundering rules are making it difficult for traders to gobble up the free lunch.
The lack of selling markets seen as pressure from arbitragers has left bitcoin prices in Korea tethered to the whims of the nation’s individual investors. The resulting boom has alarmed local authorities and underscored how fractured markets and feverish speculation can lead to strange outcomes in the nascent world of cryptocurrencies.
It also helps explain why Coinmarketcap.com; a widely followed provider of data on digital currencies, excluded Korean exchanges from some of its pricing calculations this week.
The move, which created the appearance of a digital market sell-off for the website’s users, helped spark a real-life exodus from several digital currencies on Monday. Bitcoin sank more than 11 percent, according to composite pricing on Bloomberg;
It retreated another 3.9%.
Koreans have an outsized infatuation with bitcoin. The country punches above its weight when it comes to cryptocurrency volumes, with local venue Bithumb ranked No. 4 worldwide by Coinmarketcap.com. So many Koreans have piled in that the prime minister recently warned that bitcoin might corrupt the country’s youth.
Transferring bitcoin between exchanges isn’t always instant. That can leave arbitragers exposed to great adverse price swings.
36-year-old financial analyst in Seoul who trades ( cryptocurrencies ) for his personal account, quoted he has profited from the kimchi premium without transferring funds into foreign currencies.
Bitcoin Mining Fees Surge After Chinese Officials Clamp Down
itcoin mining, the computing process that makes transactions with the cryptocurrency possible, is about to become more expensive for some after China ordered mining facilities to close.
ViaBTC Technology Ltd, which runs the fourth-biggest bitcoin mining collective, is raising maintenance fees for some of its clients Friday to 50 percent from 6 percent, according to a statement posted on its website today.
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