Update 5th of February, 2021: The Central Bank of Nigeria has finally done their worst, but this article still remains as relevant as ever. The rule still says, to trade cryptocurrency successfully from Nigeria, AVOID THE BANKS!!! Use P2P, use gift cards, use other global payment options, but avoid any Nigerian payment processor or debit card at all cost!
Crypto arbitrage trading is real in Nigeria. There are so many opportunities to make money by trading cryptocurrencies like Bitcoin, Ethereum, and USDT in Nigeria.
But the problem is that only a few people have access to the right information. You see, arbitrage trading is the same everywhere. Whether you are trading stocks, Gold, paper assets, or cryptocurrencies, the rule remains the same: Buy low, sell high.
However, the channels where you can buy low are often limited, and sometimes restricted only to some selected few.
I’m sure you have tried to do crypto arbitrage before now, but it didn’t turn out right. So many people have tried, and they’ve lost money. Including me.
In fact, I was very fascinated with finding opportunities for crypto arbitrage trading that I tested so many methods. To be honest with you, I lost money trying to follow a few of these methods, until I found some other methods that work.
Gaps That Enable Crypto Arbitrage Trading in Nigeria
Before I go into the crypto arbitrage methods that work in Nigeria, I would like to show you some opportunities or gaps that makes crypto arbitrage possible in Nigeria. If you can exploit these arbitrage avenues successfully, you will be smiling to the bank on a daily basis.
Different Forex Markets
It is no news that the Forex market in Nigeria is now segregated. There are now many players in several markets trading dollars and other currencies at a different rate from the official exchange rate set by the CBN.
This is what makes Forex arbitrage possible. You buy at the official rate or a rate closer to the official rate, and sell at the black market rate. You can replicate this system on the crypto level as well, if you know what you are doing.
The Growth of P2P Exchange
The advent and growth of different foreign exchange rates in Nigeria has given room for the growth of P2P exchange in Nigeria. Safe to say, anyone who has access to dollars is now an unofficial BDC.
Likewise, anyone who has access to cryptocurrencies, and has a phone that can access a legitimate digital trading platform, can now become a cryptocurrency trader. The democratization of all the foreign exchange markets is not only driving crypto adoption in Nigeria, but also making silent millionaires on a daily basis.
With more P2P exchangers coming into the market, the more opportunity you can have to buy low and sell high. If you do your maths right, you can find P2P exchangers that sell to you at a favorable rate. When you buy, you simply turn around and sell that same crypto at a higher amount, and make your profit.
The Emergence of Stablecoins
The emergence of stable coins has finally changed the game of Forex in Nigeria. Unknown to many people, there is a parallel Forex market going on in the cryptocurrency world. We now have what we call ‘digital Aboki’ who trade Naira and USD in cryptocurrency. The market capitalization is growing fast, and soon, this market would summount the official BDC market in Nigeria. When this happens, the market would begin to dictate its own price for Naira-USD exchanges.
The stablecoin that is making all these possible is the USDT, aka US Tether. The market capitalization for this stablecoin is growing at an alarming rate, even though the company that owns it, Tether has announced that the value may differ from the actual value of the USD. This tells you something: the market forces have taken over.
If you can buy the USDT at anywhere around 450 Naira per USDT, you can easily sell it for 485 to 490 Naira per USDT. There are caveats though, but if you manage to pull this off, either by connection or having huge trade volumes, you would be smiling to the bank every day.
Crypto Arbitrage Methods That Don’t Work
So many people have lost money trying to do crypto arbitrage in Nigeria. Some have even had their bank accounts blocked.
The forces that be are afraid. They do not want the mob market to take over the Forex market. This is because if this happens, the Naira would fall like Goliath. Naira would go to its true value, which is about 1,000 Naira to a dollar. They do not want this to happen.
That is why they have closed every arbitrage channel possible, and are looking to close more. But this can only happen on the Fiat side of things. Crypto is definitely a market leveler, and is about to give everyone the chance to play this money game.
But if you don’t know what you’re doing, there is a high chance that you would lose money instead of making money trying to do arbitrage.
I have lost money also.
I tried to arbitrage on the USDT money train, but lost a bit. I think I lost 1.2% of my capital. And that was due to lack of due diligence. I didn’t have the patience or the experience to source my capital right. So, I lost both on platform fees and the exchange.
I’ve learned my lessons though, and that is why I want to show you some crypto arbitrage methods that don’t work. Let’s take a look at them.
Trying to Buy Cheap With Your Naira Debit Card
This method would ultimately end in tears. Most Nigerian banks have blocked their cards from working on cryptocurrency platforms. They know this game and they are out to block you from making free money.
Sometimes, if you find a way to use your Nigerian Naira debit card on any crypto platform, you’ll either get debited but the payment would fail, or they would charge you above the CBN rate, up to an amount that would ensure you lose out if you try arbitraging.
You are going to lose anyway. So, avoid using your Naira debit cards for anything arbitrage for now. It doesn’t work. It would make you lose money.
Trying To Source For Dollars From Banks
I’ve seen people try to do this more often than not. They would pose as importers or ask an importer to help them get dollars from banks at the CBN rate.
While this might work for some, it is not sustainable in the long run. You might also be caught out and you will face the full arm of the law.
If you want to do crypto arbitrage, then the bank is the last place you should look to because the banks are your competitors. They make money on a daily basis doing arbitrage, but they would do everything within their power to stop you from doing the same.
There are some platforms where you can buy crypto at a very cheap rate. But the problem is not in your market entrance but in your exit. How would you exit the market without losing your profits?
I’ve discovered that most platforms where you can buy cheap crypto have high fees that are setup to diminish your profits. They charge higher fees for platform exchange and P2P exchange. Before you can get back your money in Naira, your profits would have been effectively wiped out.
So, what many people do is that they buy from a platform that sells low and tries to transfer that crypto to another wallet on a platform that buys high. The problem with this is that most times, they do not factor in the exchange fees it would cost to make such transfers. Once they make the transfer, they lose money, and their arbitrage game is over.
This shows that for now, inter-platform arbitrage doesn’t work. The fees involved would wipe out your profits, and most times, the transfer is too slow that the whole arbitrage would become frustrating for you.
Crypto Trading Arbitrage Methods That Work
There are subtle ways you can make money through crypto arbitrage, but you have to be intentional about it. These methods usually have hindrances to deter unserious people, so only those who are serious about making money with arbitrage would go ahead. Some of the hindrances could be in the form of trade volume or industry connections. So, only those who are qualified can make profits.
Just imagine if everyone can make money through crypto arbitrage. If that was possible, everyone would be doing it and the method would have no value. Like they say, nothing good comes easy. Also, if it’s too easy, then it’s not worth it. The same principle can be applied to crypto trading arbitrage.
You need to find an edge that only a few people know about, and milk it as much as possible. That is why I will be showing you some crypto trading arbitrage methods that work. Note: the methods would work for you only if you can fulfill the requirements needed.
So, without further ado, let’s see some of the arbitrage methods that work below.
P2P High Volume Trades
The truth is that small crypto traders rarely make any profit through arbitraging. It is either that the trade volume is not enough or you’ll find only a few traders with low rates willing to trade with you.
If you check most cryptocurrency platforms that offer P2P, you’d see that the traders with the best rates set a high minimum transaction limit. They do not want to deal with unserious traders and they want to reduce the fees that come with making too many small transactions.
So, the first step to making money through crypto trading arbitrage is to start with a respectable amount of money as your capital. I would say between 200k and 500k.
With higher trade volume, your profit can increase exponentially. Let’s do some quick maths.
Let’s say you can make 0.2% profit per arbitrage trading you do. If your capital is 20k, you make a profit of 40 Naira. To make 4k Naira profit per day, you would need to repeat the cycle 100 times!
What if you had a capital of 200k? You would make a profit of 400 Naira. To make 4k Naira profit per day, you would need to repeat the cycle just 10 times.
With a capital of 2 million Naira, you could make 4k on a whim. If you need more, you could repeat the cycle 10 times to make 40k profit per day.
Can you now see how your trade volume could transform your daily profit from just 40 Naira to 40k naira? That is scale. You would be wondering how these big players are making huge profits off crypto doing arbitrage, but the truth is that they are not doing anything different. They just have bigger capital to trade with, hence, their bigger profits.
With a handsome capital, you could start trading crypto via P2P with the guys who have the best rates but set high minimum transaction volume.
On Binance, I’ve seen a trader with a sweet rate put his minimum transaction to 1 million Naira. That means, if you don’t have 1 million Naira, you can’t trade with him. His rate was about 5% above the others, which means that just by trading with him, you are already 5% richer in profit than the vast majority in that market. Think about that.
Sourcing Cheap Dollars From Freelancers
Another way to make money through crypto arbitrage is to understand that your market entry point is key. In fact, where you source your dollars has the power to make or break your arbitrage plan.
Sourcing cheap dollars from freelancers is definitely a very good option. It is one of the best ways to start sourcing your dollars if you want to make big profits with crypto arbitrage.
Most big players in this arbitrage game own currency exchange platforms that focus on freelancers. Freelancers bring a huge inflow of dollars into Nigeria digitally, and only those who are savvy capitalize on that.
Imagine buying dollars from freelancers at 360 to 380 Naira per dollars and then using that dollar to buy cryptocurrency that will sell for 490 Naira. That is another way to print money legally, and many people are doing it in Nigeria.
Here are the steps on how this works:
- Setup a currency exchange platform
- Buy dollars for 360-380 Naira per dollar
- Send dollars to Neteller or Skrill
- Buy crypto such as Bitcoin, Ethereum, or USDT
- Sell crypto in large volume at 490 Naira exchange rate.
- Smile to the bank
If you can offer freelancers an exchange rate of 400 Naira per dollar, you would be able to pull in a consistent base of dollar suppliers for your crypto trading arbitrage. PLEASE READ THAT AGAIN!
The goal is to be competitive and win as many dollar suppliers as possible to your business. If you can do that, you would be smiling to the bank on a daily basis. But also, you would be putting a smile on the faces of many freelancers in Nigeria who are constantly shortchanged by currency exchangers trading at poor rates.
Sourcing Cheap Dollars From BDCs
This is another option to source for your dollar, but it is only for those who have connections to BDCs or currency exchangers. So, obviously, not everyone can do this.
The idea is to have someone who can supply you a good amount of dollars to your domiciliary account on a consistent basis. If you have a friend who is a BDC or currency exchanger, then you can strike a deal with them to supply you with dollars and then you give them a cut of whatever you make after your daily cycle of crypto trading arbitrage.
The Gift Card Method
Yet another method that relies on getting a cheap supply of dollars. If you can get someone to sell you some gift cards for a cheaper amount than the going rate, then you can use that gift card to buy crypto on some crypto trading platforms. Once you buy your crypto, exchange it for Naira and subtract your cost. The rest is your profit.
Most people who are into this method usually have platforms where they buy gift cards. In fact, most of the platforms you know of that buys gift cards are into crypto arbitrage. Are you surprised? You shouldn’t be.
I think anyone can set up shop as a gift card buyer in Nigeria without any issues. You can do the same and build a consistent supply of cheap dollars for your crypto arbitrage.
Crypto arbitrage is hard and is not for the faint-hearted. You have to always be alert and very calculative if you do not want to lose your money. This is because one wrong move could wipe out your profits and some of your capital.
You also need to use the right platforms that accept Nigerians, and also build relationships with some P2P traders. You need to be in the right circle so that you will have access to the right information at the right time.
That said, there is big money in crypto arbitrage. With a capital of just 500k, you could become a self-made multi-millionaire just from your bedroom.
As long as the guys at CBN tower continue to wallow in their confusion, there would be room for smart peeps like you and I to make big money with crypto trading arbitrage.