Tokenized Stock & Arbitrage Research Report | December 2021 🌴

5 min readJan 25, 2022

What a year it has been for tokenized stocks! Whether it was the headlines of new regulations, added trading exchanges, or opportunities not seen in fully efficient markets, there has been no shortage of excitement.

For the 365 trading days of the year, unlike traditional markets that are only open 253 days a year, there were arbitrage opportunities found in all 28 trading tokenized stocks EVERY single trading day. No, that was not a typo — there were arbitrage opportunities every day for every stock. That equates to greater than 10,000 instances of daily arbitrage throughout 2021.

FTX Monopoly Dominates Tokenized Stock Trading

What is even more promising is that the arbitrage opportunities have continued even as the tokenized stock volume has continued to increase. While some may argue that wide spreads are the sole reason for perceived arbitrage, we can see that FTX volume exceeded $160 million for December, up over 800% from January, and the same opportunities are still prevalent.

The growth, increased market share, and development of FTX in the world of tokenized stocks is auspicious. As we head into 2022, FTX has nearly 100% of the tokenized stock market share, giving them a massive leg up on such innovative technology.

Grayscale Bitcoin Trust (GBTC) Tokenized Stock Emerges as Big Winner in 2021 Volumes

As Bitcoin continued to sell off in late 2021 and early 2022, we saw Grayscale Bitcoin Trust ($GBTC) make up a whopping 43% of all tokenized stock trading volumes! That means for every $1,000,000 traded on FTX’s tokenized stock exchange, around $430,000 came exclusively from trading tokenized GBTC stock. It’s almost more than the other 27 tokenized stocks combined.

Although there are many theories as to why Grayscale has dominated the tokenized stock landscape on FTX, one in particular stands out: Bitcoin Arbitrage. GBTC is limited to market hours of 9:30am to 4:00pm, Monday to Friday. However, with Bitcoin trading 24/7, this leaves GBTC investors and traders feeling left out on the sidelines after market hours.

With tokenized stocks, GBTC traders are able to enjoy their 24/7 trading, blockchain-powered transactions, and instant settlements. They can redeem for the underlying share of GBTC at any given point, which allows for handsome profits assuming FTX traders bought the tokenized stock at a discount to the NASDAQ or NYSE markets.

Arbitraging BlackBerry ($BB) Stock at -40% Discount

With tokenized stocks, you’re shopping in the Clearance section of the stock market almost every day.

On December 30, 2021, Blackberry saw a sudden and massive drop right around 7 PM — remember, tokenized markets are 24/7, so investors were buying and selling. We are talking about an immediate 40% price reduction in seconds. Shrewd investors hopped on this opportunity and took advantage before it returned to its typical trading range for the day. Someone bought at $4.94 and sold immediately at $9.41 — not too bad of a trade, huh?

Those are the opportunities that tokenized markets have been offering investors.

Tokenized Stock Correlations Hit an All-Time Low

As mentioned in previous arbitrage reports, tokenized stocks are not mirrored shares. Since they are derivatives, their price action will not always mirror its equity share. This matters for investors looking to capitalize on opportunities not previously available to them. For instance, tokenized Apple stock, Tesla stock, and Amazon stock all have a mind of their own. They are not bound to their traditional equity pair’s buy and sell pressure. In fact, the price correlation has been decreasing month over month. In the month of December, the highest price correlation of all tokenized stocks was 0.42. Uber, General Motors, and others even traded at a negative correlation to its NASDAQ pair.

So what does this all mean?

Opportunities.

Even though the correlations have become less and less, eventual price action leads both the NASDAQ and tokenized equity to close back around the same area. With that knowledge, one can capitalize on massive price discrepancies. $BB is the perfect example.

For those who are newer to the added features, tokenized stocks differ from traditional equity in several key ways. These include:

24/7 live and nonstop trading — 3 AM on a Saturday? Yup. Noon on Christmas? Yes, please. 7 PM on New Year’s Day? Why not.
Fractionalized stock ownership — Investors can buy ½ a share, ¼ share, or even 0.7204825 shares of $TSLA!
Worldwide Access — International investors can get their hands on assets that may have originally been tough to invest in.
Instant-settlement — Traditionally, in the public-equity markets, investors have to wait up to two business days (T+2) for settlement to complete — tokenized stocks are virtually instant due to the nature of blockchain technology!

We’re so thrilled to have been a part of the tokenized stock action in 2021, and we can’t wait for all 2022 has to offer us.

Here’s to a Happy New Year, to more prosperity, and… to more arbitrage! Regardless of how the markets turn out, we’re optimistic that traders can get on the cutting edge of arbitrage opportunities in 2022.

This is just a sneak peak…..

Want more data, including hourly arbitrage opportunities for all 28 tokenized stocks? Reach out to aneesh@stomarket.com on pricing for exclusive access to 24/7 arbitrage trading data, or research@stomarket.com for exclusive access to FREE research reports covering the security token industry.

Everything in this report is for informational purposes. Nothing in this report should be taken as financial advice or as an inducement to purchase or sell any security. Nothing in this market report should be used as legal advice. Always do your own research before making any decisions regarding financial transactions of securities.