Bitcoin (BTC)</strong></a>. The phenomenon was named after a Romanian Bitcoin trader known by the pseudonym &ldquo;Lord Ashdrake&rdquo;. Lord Ashdrake was a well-known <strong>cryptocurrency skeptic</strong> in the Bitcoin community.</p>\n<p>His strategy relied on <strong><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-short/">shorting Bitcoin</strong>&nbsp;&ndash; expecting the cryptocurrency to lose its value. His strategy saw considerable success between 2014 and 2015, a period when Bitcoin had lost nearly half its total value. Lord Ashdrake was known for encouraging other traders to adopt a shorting strategy.</p>\n<p>Prior to the incident, Ashdrake notably shorted Bitcoin when the cryptocurrency broke $300. In the following weeks after this drop, Bitcoin prices saw a rapid increase, nearly going up to $600. Lord Ashdrake maintained his short position, ultimately leading to him losing his entire invested capital.</p>\n<p>In 2017, the <strong>Chicago Board Options Exchange (CBOE)</strong> started allowing traders to trade <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-are-futures/">Bitcoin futures</strong></a>. This is a process of placing bets on the BTC price without the risk of actually holding cryptocurrency. This was noted in the financial press, with crypto-skeptics predicting that large short positions would be held by institutional investors predominantly.</p>\n<p>The predictions wound up being inaccurate, as Bitcoin futures saw huge rises without a few hours. As a consequence, prominent brokers started forbidding their clients from taking short positions. The general fear was that shorting Bitcoin futures could lead to investors getting &ldquo;<strong>Ashdraked</strong>&rdquo;.</p>","level":"easy","meta_title":"What is Ashdraked? Definition & Meaning | Crypto Wiki","meta_description":"Ashdraked meaning: Ashdraked - the loss of a trader’s entire invested capital after shorting Bitcoin; named after Bitcoin trader under the pseudonym “Lord Ashdrake”.","meta_keywords":null,"language":"en","created_at":"2022-02-11T07:50:26.000000Z","updated_at":"2022-05-13T14:32:22.000000Z","preview_url":"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-ashdraked"},"prevSection":{"id":57,"original_id":null,"author_id":41,"translator_id":null,"title":"What is Apeing?","slug":"what-is-apeing","section":"A","keyword":"Apeing","status":"published","definition":"a phenomenon in the crypto industry when a trader purchases a token shortly after its project launch date without thoroughly researching it.","content":"<p><strong>Apeing</strong> occurs when <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-cryptocurrency/">cryptocurrency traders</strong></a> buy a new token or currency not long after its project launch. The name was chosen to describe the &lsquo;low-IQ&rsquo;, &lsquo;monkey-like&rsquo; behavior of buying without thinking or researching.</p>\n<p>Traders that engage in apeing tend not to do substantial research before buying. These purchases are often driven by <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-fomo/">fear of missing out (FOMO)</strong></a>. Traders may believe that if they do not rush to buy, they may lose out on potential gains.</p>\n<p>Apeing as a term was popularized during the <strong>2020 DeFi Summer</strong>. A large number of sudden and prior unannounced token projects were launched. Traders who bought the tokens of these projects soon after their launch made notable profits, leading to a bigger wave of apeing behavior.</p>\n<p>This behavior is often brought upon by social media trends, as traders who see others online discussing their profits try to emulate them by finding a newly launched project and investing in the tokens with minimal research.</p>","level":"easy","meta_title":"What is Apeing? Definition & Meaning | Crypto Wiki","meta_description":"Apeing meaning: Apeing - a phenomenon in the crypto industry when a trader purchases a token shortly after its project launch date without thoroughly researching it.","meta_keywords":null,"language":"en","created_at":"2022-02-11T07:36:52.000000Z","updated_at":"2022-05-13T14:32:22.000000Z","preview_url":"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-apeing"},"currentChapter":"A","currentSection":"what-is-arbitrage","chapterTitle":"A","readingLevel":"medium"},"url":"/crypto/learn/crypto-terms/what-is-arbitrage","version":"cdd198d50cbe5c9c21c9329d7c096ffc"}" class="container-fluid d-flex crypto-book p-0">
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Crypto Terms: Letter A

What is Arbitrage?

Arbitrage MEANING:
Arbitrage - the act of purchasing and selling the same asset in different markets nearly simultaneously to take advantage of the differing prices and increase profits.
Medium
2 minutes

Let's find out Arbitrage meaning, definition in crypto, what is Arbitrage, and all other detailed facts.

Markets like cryptocurrency or traditional stock exchanges are inefficient by design. Some of the reasons for this inefficiency are the uneven information access across all market participants, varied trading tools and strategies, costs of transactions, and others.

These variables can lead to the prices of the same assets – whether traditional or digital – being inconsistent throughout the different market platforms. Traders who are aware of this varying information and know how to use it to their advantage to maximize their profits are known as arbitrage traders.

Arbitrage trading is a strategy of buying an asset where it is listed cheaper and selling it in a market where its price is higher nearly simultaneously. This phenomenon exists thanks to market inefficiencies.

Arbitrage traders, also known as arbitrageurs, increase their profits, make markets more efficient, and ensure that the pricing of the same asset is similar across a number of different exchanges.

As arbitrageurs buy the asset at a lower price on one exchange and sell it for more on the other, the divide between the exchanges is reduced. This lowers the window of opportunity for arbitrage trading, making the markets more efficient.

Arbitrage trading ensures that assets do not deviate from their fair value for an extended time. It also enhances the liquidity flow between different exchanges.

Since arbitrage trading is executed as the same quantity of an asset being purchased and sold on different exchanges, there is little to no risk on the strategy for the arbitrageur.

However, the aspect of the speed of arbitrage may be risky, since the trading needs to be executed nearly instantaneously on multiple exchanges. There is also a high cost of trading, known as commissions, which the arbitrageurs have to pay on the different exchanges.

Arbitrage trading can occur between two or more markets, using one or more assets. An arbitrageur can purchase cryptocurrency as an asset for $30,254 per coin on exchange A. They then sell it for $30,476 on exchange B.

More complex trades that involve the exchange of three different assets across three different markets are known as triangular arbitrage.

Due to technological advancements and automated trading, there are fewer opportunities for fast-paced arbitrage trading. Despite this, given the continued existence of market inefficiencies, arbitrage remains a vital part of inter-market trading.
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