Crypto Arbitrage: Everything You Need to Know to Profit

Crypto arbitrage will probably seem like an attractive prospect — who doesn’t like the idea of buying crypto in one place and selling it for a profit somewhere else?

What Is Crypto Arbitrage?

Simply put, crypto arbitrage means buying cryptocurrency on one exchange and selling it for a higher price on another exchange, allowing you to make a profit.

Types of Arbitrage

Spatial arbitrage

This type of arbitrage involves purchasing crypto from one exchange and immediately selling it on another for more money.

Types of Arbitrage

Convergence arbitrage

Here, a coin bought on one exchange is sold short on another exchange. The goal is to see both prices converge, and which is when arbitrageur closes both positions.

Types of Arbitrage

Triangular arbitrage

This is the most complicated strategy and involves trading across more than one trading pair.

Why is Arbitrage Possible?

Here are some potential explanations: - Variations in liquidity: Every exchange has a different amount of liquidity for each asset, depending on how many people buy or sell it. - Different exchange types: Not all exchanges selling cryptocurrencies are the same. - Withdrawal and deposit times: Exchanges with slower processing times take longer to catch up with the overall market rates (often smaller exchanges).

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