Crypto

Since cryptocurrency trading still in its early infancy & markets spread all around the globe, there may be notable price differences across various exchanges. Crypto arbitrage allows taking full advantage of those price variations, buying crypto coins on one exchange A where the price is significantly cheaper & simultaneously trading it on a different exchange where the price is higher.

Arbitrage means purchasing & immediately selling the same crypto asset in an attempt to gain profit from the temporary price imbalance. With that in mind, when something is being sold on a market at a lower price & at a higher price on different markets, people can easily buy it from the 1st one & sell it on the second one, ultimately gaining profit from the transaction.

Arbitrage refers to the simultaneous buying & selling of a crypto asset on various markets in an attempt to profit from the price temporary price difference between the markets. In a highly simplified model of how exactly cryptocurrency arbitrage works, you can search for any particular coin that’s significantly less expensive on Exchange A than on Exchange B. You then purchase the coin on Exchange A and sell it for a greater price on Exchange B, ultimately keeping the difference.

The concept of arbitrage trading isn’t new and has, in fact, existed in bond, stock, & foreign exchange markets for many, many years. Nevertheless, the rise in quantitative systems designed to recognize price differences & execute trades across markets has placed arbitrage trading out of reach for the majority of retail traders.

Furthermore, there are still plenty of arbitrage opportunities in the world of cryptocurrency, where a rapid rush in trading volume & inefficiencies across exchanges result in significant price differences. Some of the larger exchanges with greater liquidity effectively control the prices of the rest of the crypto market, with smaller exchanges quickly following the prices set by their larger counterparts. However, most smaller exchanges don’t instantly reflect the prices set on larger exchanges, which is exactly where opportunities for crypto arbitrage arise.