Tracking Ethereum and BSC Arbitrage Strategy Could Be Profitable

• Two addresses could make as much as $1,200 to $12,000 on Ethereum and BSC.
• While some trades could end in profits, others could end in losses.
• A good entry for ETH could be around $1,634, provided the buying momentum increases.

In crypto, it is not uncommon to use the arbitrage strategy to make profits, and this is what two addresses have been doing daily, according to on-chain analyst Lookonchain. By definition, arbitrage involves the buying of a cryptocurrency in one market and selling it in another market at a higher price.

In some cases, participants swap a token for the same token with potentially higher profitability on another network while making quick gains within a short period. According to Lookonchain, two addresses could earn between $1,200 and $12,000 daily using the on-chain arbitrage strategy.

For instance, one of the addresses swapped USDC for NGL on the Ethereum (ETH) blockchain. Moments later, the same address sent the NGL on the Binance Smart Chain (BSC) and sold the token for decentralized stablecoin DAI.

Lookonchain further noted that the transaction ended in a profit of $7 after deducting gas fees. However, the on-chain analyst noted that not all arbitrage is profitable. He cited an example of another who bought 2000 BUSD on BSC, and after exchanging it for some tokens, he made a $21 loss.

While highlighting that the strategy can be difficult, it was also noteworthy to mention that these two addresses could make huge profits using the arbitrage strategy 5 to 10 times per hour.

ETH Price Action

Regardless of the on-chain activity, ETH has been able to maintain its value above $1,600. According to CoinMarketCap, the exact value at press time was $1,634— a similar price to what it was 24 hours back.

Previously, ETH had experienced some profit-taking as the price went down from $1,736 to $1,611. However, the 4-hour ETH/USD chart showed that buyers have reappeared in the market, and this was instrumental to the rise to $1,634.

Additionally, the Chaikin Money Flow (CMF) was down -0.26. The CMF is an indicator that shows the volume of accumulation or distribution over a specific period. Thus, the downtrend of the indicator implies that there has been more distribution than accumulation of ETH lately.

When compared with the price action, the CMF value at -0.26, could serve as an entry point for traders looking to long ETH. But that would also depend on the strength of the altcoin. At the time of writing, the Relative Strength Index (RSI) was 45.10.

Furthermore, the RSI value rose from 32.30 on October 5, meaning there has been a revival of buying momentum. If the momentum continues to increase, then ETH could rise to $1,665 in the short term.