Crypto Arbitrage Premium Hits ‘New Normal’ Below 1%
By Ciaran Ryan – 2 June 2026
The cryptocurrency arbitrage premium—a once lucrative and relatively low-risk opportunity for South African investors—has settled into a “new normal” level of just under 1%, marking a significant decline from historic highs. This shift reflects changing market dynamics, regulatory environments, and currency fluctuations.
From Generous Margins to Modest Premiums
At its peak in 2017 and 2018, the crypto arbitrage premium reached extraordinary levels, frequently hitting 10% and occasionally surging beyond 20%. During that period, investors could buy bitcoin (BTC) on international exchanges and sell it on South African platforms for a quick 4-5% profit or more in a single day.
This arbitrage arose partly due to South Africa’s exchange controls, which limited the free movement of capital across borders. Consequently, South African buyers paid a premium for cryptocurrencies, which were highly liquid and exchangeable worldwide, effectively bypassing local financial restrictions.
However, this edge has substantially diminished. Today, the arbitrage premium hovers just below 1%, with a small recent rise above that threshold attributed to a weakening South African rand (ZAR) against the US dollar (USD).
Supply, Demand, and Market Efficiency
According to Carel de Jager, CEO of Silver Sixpence, the premium’s decline is primarily driven by shifts in supply and demand. The appetite for bitcoin and other cryptos is not as fervent as five or six years ago, while the supply has expanded significantly. One key factor expanding supply is the increase in South Africa’s Single Discretionary Allowance (SDA) from R1 million to R2 million per year, allowing more residents to legally move funds internationally to purchase cryptocurrencies.
Additionally, companies such as Future Forex and Currency Hub have professionalized the arbitrage process. These firms handle the complexities and risks associated with transferring funds and converting between fiat currencies and cryptocurrencies, removing much of the volatility and logistical challenge for individual traders.
Harry Scherzer, CEO of Future Forex, noted that fluctuations in the arbitrage premium closely correlate with the strength of the rand and bitcoin price movements. For example, in early May 2026, improving global risk sentiment—fueled by easing US-Iran tensions—strengthened the ZAR, lifting the arbitrage spread slightly. Conversely, geopolitical uncertainties and spikes in oil prices later pressured the rand, tightening the premium again.
Still Viable Despite Thinner Margins
Even at current levels, crypto arbitrage remains viable. Scherzer estimates that the strategy can still yield an annual return of 10-20%, framing it now as a more stable, long-term investment rather than a high-risk, quick-profit scheme.
Warren Deats, CEO of Currency Hub, attributes the compressed premium to greater market efficiency and increased competition. More market participants, including structural stablecoin sellers bringing foreign funds into South Africa, have entered the space beyond traditional arbitrage desks. This broadening market participation reduces price discrepancies that previously allowed for significant arbitrage gains.
He further explained that arbitrage spreads tend to narrow when the rand weakens concurrently with a rising bitcoin price, reflecting the twin market forces at play.
Future Outlook: A Mature yet Persistent Market
Despite repeated predictions of the crypto arbitrage market’s demise, it persists, albeit with slimmer margins. Given ongoing cryptocurrency price volatility and the rand’s fluctuating fortunes, arbitrage opportunities will likely remain for some time.
While the days of 20% same-day returns are gone, the “new normal” spread below 1% still offers an attractive and relatively low-risk avenue for South African investors to capitalize on the global cryptocurrency market, especially when structured through professional services.
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Tags: crypto arbitrage, bitcoin, rand, exchange controls, Currency Hub, Future Forex, stablecoins, Single Discretionary Allowance, South Africa, Carel de Jager, Harry Scherzer