Cryptocurrency Arbitrage Algorithms Rake in Big Profits Amidst Volatility
Arbitrager Rakes It In
Virgil Capital, a cryptocurrency arbitrage fund founded in 2016 by 21-year-old Stefan Qin, returned 500% last year after fees and is now managing $23.5 million, The Wall Street Journal reports.
Qin, An Australian living in California who put his studies on hold at Minerva Schools, uses an algorithm called Tenjin that monitors prices on about 40 exchanges The algorithm allows him to identify arbitrage opportunities.
While bitcoin fell 28%% in early January, Virgil Capital was up by 12% after fees, Qin said. Qin thinks he will continue to be profitable even if bitcoin continues to lose value. He said the market is “incredibly irrational” at the present time, and is poised for a correction.
Qin, a former math whiz, plans to finish his college degree at some point, but has no immediate plans to do so.
Also read: Bitcoin price arbitrage explored
Arbitrage Algorithm Project
Tenjin is not the only cryptocurrency arbitrage algorithm.
RIALTO.AI, a project consisting of data scientists, signal processing experts and trading economists, has designed proprietary algorithms for market making and arbitrage. RIALTO.AI’s arbitrage algorithm is designed to run 24/7, making small profits every time a divergence in cryptocurrency prices is detected, regardless of a cryptocurrency’s price going up or down. Its algorithm executes chain trades among several cryptocurrencies, effectively maximizing its fund’s value.
On May 12, 2017, bitcoin’s price in the South Korean exchange market was $2,076, approximately 12.7% higher than that of the global average price. Bitcoin was traded on South Korean exchanges and trading platforms at a price that was $269 higher than the global average price of $1,807.