Ovex has done more than any other company to introduce South Africans to crypto arbitrage, which allows customers to profit from differences in crypto prices between local and overseas markets.
Ovex founder Jon Ovadia says there has been a noticeable uptick in demand for arbitrage services following the nearly 50% collapse in the price of bitcoin and other cryptos such as Ethereum.
“This is something that we have seen before when crypto prices have crashed – people turn to arbitrage as an alternative way to make money.”
Ovex has now introduced a referral programme, adding another way to earn passive income from crypto arbitrage. The programme pays out R1 000 for each new client introduced for the first 10 clients, and then scaling up from there.
Ovex referral programme
“A large proportion of our clients come from word-of-mouth referrals, so we decided to reward them for doing what they were already doing – introducing new clients,” says Ovadia. “The programme has been structured in a way that offers substantially higher rewards per referral when large numbers of referrals are introduced. This would be attractive for those with large networks or client databases.”
The launch of the referral programme comes at a time when crypto prices have been in the doldrums.
Find out more about the referral programme here.
Making arbitrage profits in bull and bear markets
Ovadia adds that crypto arbitrage is a reliable way of making profits on both bull and bear markets.
Though bitcoin has delivered compound annual returns of around 200% for a decade, there have been long periods of stagnation or declining prices, particularly after a strong bull run such as we saw in late 2017 and before that, in 2014.
“Crypto arbitrage is a proven way to make passive income, regardless of the market conditions in crypto,” says Ovadia. “The arbitrage premium generally ranges between 1.5% and 4%, but more recently has been about 1.5% after costs, which is not as high as it has been, but is still a way for South Africans to build up their capital in an otherwise weak market.”
To participate in crypto arbitrage, clients are required to use their R1 million per year single discretionary allowance (SDA), for which no tax clearance is required from the South African Revenue Service (Sars), and their R10 million per year foreign investment allowance (FIA).
Ovex recommends starting with capital of R100 000, though returns improve if the starting capital rises to R200 000 or more. This is because the R500 fixed cost of purchasing forex on each arbitrage cycle has a proportionately smaller impact on profits when higher capital amounts are traded.
How crypto arbitrage works
Arbitrage is a well established component of the crypto market. Each crypto exchange will have slightly different prices for bitcoin (BTC), ether (ETH) and other cryptos, but those price differences are more pronounced on SA exchanges, because of exchange controls and other localised features of our market. Hence, it is possible to buy cryptos cheaper on overseas exchanges and sell them for a profit on SA exchanges.
Rather than arbitrage differences in bitcoin prices, Ovex spotted an opportunity to arbitrage a stablecoin called True USD (TUSD) which is backed 1:1 by the US dollar. True USD (TUSD) is issued by San Francisco-based Trust Token, and for South Africans offers arbitrage profits similar to that typically seen in bitcoin.
A stablecoin is a type of crypto asset fully backed by a fiat currency, such as the US dollar. Just as with bitcoin, Ovex clients can purchase TUSD in the US and then sell them at a higher price on the Ovex exchange.
Stablecoins are frequently used by investors to part profits earned in bitcoin and other cryptos without leaving the crypto space.
“Crypto arbitrage is here to stay and is a way for investors to make profits, no matter whether crypto prices are rising or falling,” says Ovadia. “Now with the referral programme, we’ve added another way to earn passive income.”
Arbitrage premiums (the difference between local and overseas prices for cryptos) vary depending on market conditions. Arbitrage trading can be technically challenging for most investors, which is why Ovex has automated process to make it simple and fast.
Click here to find out more about Ovex’s crypto arbitrage service.
Brought to you by Ovex.
Moneyweb does not endorse any product or service being advertised in sponsored articles on our platform.