What Is Crypto Arbitrage?

When done successfully, crypto arbitrage can literally mean making money out of thin air. But done wrong, it can mean losing huge sums, so make sure you know what you’re doing before you dive straight in.

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

What Is Crypto Arbitrage?

- Spatial arbitrage. This type of arbitrage involves purchasing crypto from one exchange and immediately selling it on another for more money. - Convergence arbitrage. Here, a coin bought on one exchange is sold short on another exchange.  - Triangular arbitrage. This is the most complicated strategy and involves trading across more than one trading pair.

Types of Arbitrage

- 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 — many target different types of investors or different countries, which can affect prices.

Why is Arbitrage Possible?

The principle of crypto arbitrage is one thing; putting it into practice is quite another. Let’s rewind to when we said there are three main types of arbitrage: spatial arbitrage, convergence arbitrage, and triangular arbitrage.

How to Arbitrage Cryptocurrency

If you opt for spatial arbitrage, you’ll buy crypto on one exchange, transfer it to another exchange, then sell it on the other exchange.

Spatial Arbitrage

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