How to do arbitrage on Bisq
Arbitrage is the simultaneous purchase and sale of the same asset in different markets in order to profit from differences in price. Inefficient or illiquid markets have many arbitrage opportunities. By reducing these inefficiencies arbitrageurs profit, but also help improve price efficiency and market liquidity. It is a very necessary role in financial markets.
Bisq is an inefficient market at the moment and provides many arbitrage opportunities. P2P markets generally need arbitrageurs to do what centralized markets do with a trade-matching engine.
Here is an example of how you can profit:
1. You find that the best offer to BUY Bitcoin on Bisq EUR/BTC is priced 105.
2. You find another market where you can BUY Bitcoin for 100.
3. You buy at 100 at market X and simultaneously sell on Bisq for 105.
4. You will have made a profit of 5 with very little risk.
The above is an example of inter-exchange arbitrage.
You can also do intra-exchange arbitrage on Bisq. For example:
1. You find that the Bitcoin price on Bisq USD/BTC market is higher than on Bisq EUR/BTC.
2. You simultaneously SELL BTC for USD and BUY BTC for EUR.
3. Repeat step 2 until the profit opportunity disappears.
Another example of intra-exchange is between different payment methods.
1. You see that available offers to BUY Bitcoin paying with SEPA have a lower price than offers to SELL Bitcoin paying with Revolut.
2. You simultaneously BUY BTC for 100 with SEPA and SELL BTC for 105 with Revolut.
3. Repeat step 2 until the profit opportunity disappears.
