The price of Bitcoin is absolutely surging in India amidst demonetization of the 500 and 1000 Rupee notes as announced by the Indian Prime Minister Narenda Modi on November 8, 2016.
As of approximately 2:00pm ET November 24, 2016 the price across the three leading Bitcoin exchanges in India had an average Bitcoin buy price of 67,735.33 INR or 984.92 USD.
|Exchange||Buy price (INR)||USD Equivalent|
At the same time, the price across the three leading Bitcoin exchanges in the US had an average Bitcoin buy price of 735.92 USD leaving a 249 USD or 33.8% premium on Bitcoin in India.
|Exchange||Buy price (USD)|
So how can traders in the US profit from this arbitrage opportunity while it lasts? There are two ways which I will outline below.
- Send Bitcoin from your US exchange/wallet to one of the Indian exchanges listed above and sell for Rupees. Hold rupees until the demand is satisfied, prices converge between the US exchanges and the Indian exchanges the equilibrum price is established. Exchange Rupees back to Bitcoin and withdrawal Bitcoin back to your US exchange/wallet. Note that unless you comply with KYC requirements, you can currently only do this method on the Coinsecure exchange to the best of my knowledge. It should also be noted that holding money on exchanges is extremely risky considering how vulnerable we have seen exchanges are to theft from hackers. As this method requires holding Rupees on the exchange until the price converges back to equilibrium, it widens your exposure to the risk of the exchange being hacked and losing your funds.
- If you have a bank account and proof of address in India, you can comply with KYC requirements on the Indian Bitcoin exchange. This will allow you to withdrawal your Rupees to your Indian bank account, exchange to USD and transmit back to your US bank account. This method follows the same protocol as 1. above, with the distinct difference of exchanging your Rupees to USD and taking the 33.8% (current) gain immediately as opposed to holding Rupees and waiting for the prices to converge before exchanging back to Bitcoin. Note, you will incur exchange fees from your bank that will eat into your profits with this method. Further, this method will only be relevant to those holding both a bank account in the US and India.
If you have any questions on this strategy or just want to chat, feel free to contact me at email@example.com via email or g-chat.
Happy trading, and happy thanksgiving!