By Neilson- How to do arbitrage
June 6, 2025 – Amid crypto’s infamous volatility, one trading tactic has quietly drawn attention for its logic and potential: arbitrage. Still, many newcomers ask the same question without losing money or running into legal grey areas?
Arbitrage, in essence, is a method of taking advantage of price discrepancies for the same asset across different markets. And in the world of cryptocurrency, where prices can vary slightly between exchanges, those discrepancies can represent profit — if you move fast.
What Is It, Exactly?
Crypto arbitrage refers to the act of buying a digital asset at a lower price on one exchange and simultaneously selling it at a higher price on another. Since cryptocurrency markets operate independently, the price for a coin like Bitcoin or Ethereum may differ — even if only by a fraction.
For instance, if Ethereum trades at $3,000 on Exchange A and $3,020 on Exchange B, a trader might purchase ETH on the cheaper platform and quickly offload it for a profit on the other. The key word here is quickly — because in crypto, prices can shift in seconds.
Do Arbitrage Without Costly Errors
Now for the crux of the issue — effectively ARBITRAGES . While the core idea is simple, execution often isn’t. Here’s a breakdown of major arbitrage methods and how traders approach them:
1. Spot (Direct Exchange-to-Exchange Trading)
This classic method involves buying a coin on one exchange and selling it on another for a profit. The biggest challenge? Transfer time. Network congestion or slow withdrawals can close the price gap before the sale happens.
Tip: Use platforms with fast withdrawal processing and low transaction fees. Some traders keep funds in multiple exchanges to minimize delays.
2. Triangular Arbitrage (Within a Single Exchange)
Triangular arbitrage involves moving between three currencies on the same exchange. Say BTC → ETH → USDT → BTC. If the internal pricing is misaligned, the trader may net a small gain — without needing to transfer between platforms.
Though effective, this method requires precise calculations and isn’t typically recommended for beginners.
3. Automated Using Bots
Advanced users sometimes rely on trading bots that monitor and act on micro-opportunities 24/7. These bots can scan hundreds of pairs and execute trades instantly — something no human can do manually.
However, quality bots cost money, require trust in their code, and still face risks from fluctuating fees or exchange API delays.
The Common Pitfalls
Crypto arbitrage may sound low-risk on paper, but several obstacles can erode — or erase — your profits:
- Withdrawal Delays: If you can’t transfer funds before the window closes, you miss the opportunity.
- High Fees: Transfer fees, trading costs, and slippage can eat away gains.
- Verification Limits: Know-your-customer (KYC) rules or withdrawal caps can prevent timely movement of assets.
- Slippage: The market price can shift between your buy and sell, reducing or reversing your expected profit.
Bottom line: speed and strategy matter just as much as spotting the opportunity.
Is Crypto Arbitrage Still Viable?
For some, yes — especially in markets experiencing volatility or inefficiencies. While early arbitrage opportunities were plentiful, today’s landscape is more competitive. Bots and professional traders often dominate. Still, for those who are detail-oriented, willing to monitor multiple platforms, and start small, opportunities do exist.
Final Take: Mastering Arbitrage
At the end of the day, knowing how to do arbitrage is only part of the puzzle. Successful arbitrage trading requires sharp timing, a clear plan, and a strong understanding of risks — not just enthusiasm.
With careful execution and a disciplined mindset, crypto arbitrage can be a useful tool in a broader trading strategy. But as always in the world of crypto, proceed with caution… and maybe don’t quit your day job just yet.
Relevant news: Blockchain and RWAs: Real Fix for Finance or Just Another Crypto Dream?
