XRP shockingly plummeted to $0.3187 on Dubai-based exchange Bybit’s futures market, presenting an arbitrage opportunity for experienced traders.
In a recent market twist, traders witnessed a momentary price anomaly for XRP on the Dubai-based exchange Bybit. The XRPUSDT and XRPUSD perpetual pairs observed a noticeable price difference, presenting an arbitrage opportunity.
DefiSquared, a prominent crypto futures trader, successfully seized the arbitrage opportunity during XRP’s price dip on August 17.
The seasoned trader capitalized on a peculiar discrepancy between coin margin and USDT, making substantial gains. He disclosed the development in a recent post on X, revealing that he had scooped up seven figures in profit.
Just made 7 figures arbitraging an obscure derivatives depeg between coin margin vs usdt. I'm sure my more astute followers will be able to notice what it was.
— DeFi^2 (@DefiSquared) August 17, 2023
DefiSquared’s subsequent tweet shed light on the trade that led to profit. The trader pinpointed an inconspicuous derivatives depeg that resulted in a price difference between the XRPUSD and XRPUSDT contracts on Bybit.
This arbitrage window, characterized by a 45% discount, swiftly emerged and concluded within 10 to 20 minutes.
For anyone curious, the arb today was between the XRPUSD and XRPUSDT contracts on Bybit. A 45% discount occurred that closed after 10-20 minutes.
Most likely, algo market makers ran out of spot XRP needed for the coin margined contract amidst the large liquidations that occurred https://t.co/58RI9y1IHs pic.twitter.com/CpEiPFwAPQ
— DeFi^2 (@DefiSquared) August 18, 2023
The cause of the price difference was a supply-demand mismatch. This mismatch was triggered by algo market makers’ struggle to secure adequate spot XRP for the coin-margined contract amidst significant liquidations.
Notably, XRP witnessed $24.86 million in liquidations across all exchanges on August 17, per Coinglass data. Of this figure, long liquidations accounted for $22.98 million. Interestingly, total liquidations on Bybit alone amounted to $6.28 million.
Analyzing the Facts
A look at the charts substantiates claims of the anomaly. At precisely 20:59 (UTC) on August 17, the XRPUSD chart opened at $0.3325.
However, in a surprising outcome, the XRPUSDT chart opened at $0.4859 within the same timeframe. This divergence represented a price difference of approximately 46%.
The disparity hinted at an arbitrage opportunity. However, investors are unlikely to capture these opportunities timely due to the short timeframes. As a result, many believe DefiTrader got the tip from a bot.
Interestingly, XRPUSD experienced a steep fall, plunging to $0.3187 within a minute. Meanwhile, XRPUSDT remained relatively steady, only recording a low of $0.4810. This pattern highlighted the vulnerability of the XRPUSD contract to abrupt volatility.
As the market winds shifted, both XRPUSD and XRPUSDT pairs eventually regained equilibrium, trading at parity. At the time of this report, XRPUSDT was fetching $0.5016, closely shadowed by XRPUSD at $0.5018.
This price anomaly on Bybit’s perpetual market emerged a week after Gemini had its fair share of XRP-related oddity. Notably, a few hours after listing XRP, the asset’s price skyrocketed 7,836% to $50 on Gemini. This rally was due to scarcity and a dried-up order book.
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