Lots of activity around the BTC ETFs offshore, and excitement leading up to the ‘halving’ around April 20. What effect does the demand for crypto and the halving have on the premium? Andrew Ludwig – CURRENCY HUB.
CIARAN RYAN: Many people have attempted to write the obituary for crypto arbitrage, but each time it seems to bounce back with a vengeance. Just in the last few days the arbitrage premium jumped above 3%, even touching 3.5% at some points. All this is happening while Bitcoin is breaking new all-time highs, cracking R1.3 million in the last week.
And last but not least, the FSCA regulation is hopefully playing a part in discouraging nefarious unregulated activities. ANDREW LUDWIG: Ciara, our returns have been exemplary, all things considered. If we think about last year, what a tough year it was for the entire arbitrage industry. Most of the players were unable to trade for as much as six months. We, however, were unaffected by that.
Now, having opportunities to trade across exchanges and OTC desks allows us to manage the redundancy and counterparty risk while also increasing our client returns, remembering that we were one of the few guys who were able to trade out last year. CIARAN RYAN: There’s been a lot of activity around Bitcoin exchange-traded funds or ETFs. There’s also the upcoming halving of Bitcoin in April. Explain why these are important events and how this is likely to impact demand for crypto and the arbitrage premium.
ANDREW LUDWIG: Thank you Ciaran. As you know, I keep harping on about this, but regulation is good, otherwise we wouldn’t see the likes of these ETFs blowing up and becoming a present for us and the retail investors across the USA. So essentially if you don’t have a Category 2 discretionary licence, your ability to do the arbitrage is very much limited. This Category 2 licence also accounts for the bulking and when you decide to trade; so, according to the FSCA, if you’re doing either without the licence you are breaking the law and the investigations unit, which you interviewed a couple of weeks ago, will likely pursue these bad actors.