Cryptovation Terminal is anchored by the management of investment philosophy emphasizing portfolio construction with an asymmetric return profile and definable downside risk to capital invested. The flagship strategy is Arbitraging which is a trade that profits by exploiting the price differences of identical cryptocurrencies on different markets or in different forms. The trading team uses the following arbitraging strategies to generate the profit. Currently Cryptovation Terminal has deploy seven trading strategies.
- Buying Low and Selling High Price in Difference Market
- Use Now!
This is one of the most arbitrage strategy, refers to the purchase of one particular cryptocurrency (Bitcoin, Ethereum, Litecoin, etc) from a market with a lower market value and reselling it in another market with a higher value. This provides opportunities to take advantage of differing prices to generate a profit by buying low and selling high. This concept is the easiest and most straightforward arbitrage trading. However, this would also mean that the fiat currency (often USD) would be hold in destination exchange until the price in two exchanges is stabilized in order to transfer asset, or to withdraw it and pay the huge bank transfer fees and exchange rate (in some case) to complete the loop. Furthermore, one-way can be performed by two or three times, to get the funds back to the starting exchange.
For example, considering fee is 0%; in exchange A, Ethereum price is $700. On the other hand, the price of Ethereum in exchange B is $735, so if trader bought Ethereum in exchange A transfer and sell in exchange B to make $51 profit.
Two-asset Loop arbitrage refers to two instances of Single-asset One-way arbitrage, in order to avoid paying significant amount of bank transfer fees just to retrieve fiat currencies (hence losing profit) and shorten amount of time to complete the loop. The first one-way can be a profit while the second one-way can be marginal or no difference in value. This allows the user to reap the profit from the first instance while having little to no difference in the second instance through a different cryptocurrency back to the original exchange. The most ideal scenario would be in the event where both instances generate a profit instead of only one instance. Generally, one of the arbitraging ways is ripple or stellar since its transferring process is one of the fastest.
For example, considering fee is 0%; as figure shown above. Price of Ethereum in exchange A is $700 and Ripple is $0.87. While in exchange B the price is $735 for Ethereum and $0.88 for Ripple. In this case, trader can buy Ethereum in exchange A, transfer and sell it to exchange B then buy Ripple, transfer and sell it back into exchange A. The profit can be reinvest again which will equal to (1,038 - 1,000) = $38.
- The Pricing Discrepancy Between
- Use Now!
Similarly to the Two-asset Loop arbitrage, the Cross-exchange Triangle loop takes into account of three exchanges instead of two, while taking into account any transactional and platform fees. The pricing discrepancy between three exchanges will be calculated before conducting the loop. However, as certain cryptocurrencies take longer to transact, there is a certain risk of sudden price changing over time that may normalize the differences. As a result, the three-way arbitrage may not be fully completed. However, it is possible to then shift back to a two-way loop until another opportunity arises. Arbitrage strategies are dynamic and interchangeable, which can help to minimize the losses by the normalization or dramatic fluctuations.
For example, considering fee is 0%; transaction as figure shown above. Price in exchange A for Ethereum is $700 and Ripple is $0.87, for exchange B Ethereum stand at $735 and Litecoin is at $130, and in exchange C: Litecoin = $135 and Ripple = $0.88. In this case, trader can buy Ethereum in exchange A, transfer and sell it to exchange B then buy Litecoin, transfer and sell it to exchange C, and buy Ripple in order to transfer and sell it back into exchange A to complete the loop. In this case the profit can be reinvest again which will equal to ($1,051 - $1,000) + ($1,080 - $1,051) + ($1,080 - $1,068) = $68
Thank you for your interest in ‘Triangle’ but this feature is only for institutional clients. Apologize for your inconvenience. For a retail user, we will launch another version through CryptovationX.io project. Please visit the website CryptovationX.io for more information.
- Green Python
- Base on Triangle Strategy but Execute within One Exchange
- Use Now!
Another looping strategy bases on triangle strategy but executes within exchange with one condition; in order to exploit this strategy, it is necessary for that particular exchange to three quotation that can be traded in circle (for example; ETH/BTC, ETH/USD, and BTC/USD). Usually the fund position consists of those three positions already. Most of the time, these three quoting prices are not equally distributed so there an arbitrage opportunity to be made my making these three trading positions at the same time.
For example, considering fee is 0%; in the figure above, Ethereum will swap into Bitcoin, Bitcoin will swap into US dollar, and US dollar will swap into Ethereum. As the position change into one another, the profit has been make. To be more specific; $40.
Thank you for interested in using 'Green Python' but this feature is not ready yet. Sorry for your inconvenience. Please visit CryptovationX.io for updates.
This arbitrage strategy is developed by Julien Hamilton (https://github.com/butor/blackbird). It employs a tool called Single-asset Long-short that can calculate differences between two markets for a certain cryptocurrency and initiates either a long position or a short position. The decision to short or long is dependent on the market price and the equilibrium midpoint.
For example, considering fee is 0%; as figure shown above, in Market Bitfinex, the price of Bitcoin is $8,450, but in Market Bitstamp the price of Bitcoin is $8,425. It is likely that when the information about Bitcoin is fully conveyed, it will equilibrate to a midpoint value, for example $8,470. By ordering long for Market Bitstamp and Short of Market Bitfinex, it will be able to achieve a profit from the differences during equilibrium, in this example ($8,450 - $8,470) + ($8,470 - $8,425) = $25. Prior to the equilibration, the Single-asset Long-short tool will predict the price either going high or going low and set the order accordingly. At any point of change in the value would generate a profit on both exchanges.
Thank you for your interest in ‘Red Phoenix’ but this feature is only for institutional clients. Apologize for your inconvenience. For a retail user, we will launch another version through CryptovationX.io project. Please visit the website CryptovationX.io for more information.
- Black Panther
- Position at Both Exchange and Switch One Currency to Another
- Use Now!
This arbitrage technique is developed from simple loop strategy, so instead of exposing the risk of change in price during transferring cryptocurrency period. Two-asset Buy-sell Swap strategy holds position at both exchanges in cryptocurrency or fiat currency. Whenever the opportunity comes, trader will switch the position from one currency to another that has higher arbitrage opportunity.
For example, considering fee is 0% for easier calculation; as the figure shown above, there is a difference of the ETH/BTC price between Exchange A and Exchange B. By switching the position from BTC to ETH in exchange A and vice versa on exchange B, the profit has been made from differentiate of the price without a need of transferring any cryptocurrency. Furthermore, if the price of cryptocurrency reverses for both exchanges, then the position can be switched to make profit again or trader can switching position by transferring position from exchange A to B and vice versa for more arbitraging trade.
Thank you for interested in using 'Black Panther' but this feature is not ready yet. Sorry for your inconvenience. Please visit CryptovationX.io for updates.
Sometimes whale trader wants to change their positions instantly, so they place big positions onto the market to take all of the available orders that are deployed in the market. This will spike the price for a few seconds or minutes, 15 until the other traders place orders which make things go back to normal. Whenever it happens, we can stop the spiking in price and make profit from that in short time.
For example, Consider fee is 0% for easier calculation; The figure shown above is one of the examples that Single-asset Spike Capture Catcher can be implemented, demonstrating by a set of buying order, after the position has been made, all of the positions will be squared at market rate as shown on the right side of the figure.