I want to try something new for myself… still a lot of theory…
Cryptocurrency arbitrage is a way to earn money by buying cryptocurrency cheaper on one platform and selling it for a higher price on another, profiting from the price difference.
Why does this work?
Prices for the same cryptocurrency can vary on different exchanges. Reasons:
- Different numbers of buyers and sellers.
- Delay in price updates on exchanges.
- Different laws and demand in countries.
Types of arbitrage (still haven't decided what to choose🤔🧐)
1. Inter-exchange arbitrage
- Buy on one exchange and sell on another.
- Example: Bought ETH on Binance, sold on Bybit.
2. Intra-exchange arbitrage
- Use price differences between trading pairs on the same exchange.
- Example: ETH/USDT is cheaper than ETH/BTC. You convert and earn.
3. Triangular arbitrage
- On one exchange: you exchange one currency for another through several pairs.
- Example: USDT → BTC → ETH → back to USDT.
4. Regional arbitrage
- You buy crypto on an exchange in one country, sell it in another through P2P.
- Example: Bought on Binance (dollars), sold in local currency for profit.
How to get started?
1. Create accounts on multiple exchanges. (Well, this is already a given)
- Popular exchanges: Binance, Bybit, OKX, KuCoin.
2. Top up the balance.
- It's more convenient to use stablecoins (USDT, USDC).
3. Monitor prices.
- Use websites or bots for monitoring (e.g., CoinMarketCap, ArbiTool).
4. Calculate fees.
- Consider fees for deposits, withdrawals, and exchanges. Otherwise, there is a risk of going into the red.
5. Speed of transfer.
- Some networks transfer crypto slowly, and the price may change.
- For fast transactions, it seems to me, it's better to use networks like TRC-20 or BSC.
Example of simple arbitrage (correct me if I'm wrong)
1. On Binance BTC costs $96,000.
2. On KuCoin or OKX BTC costs $96,100.
3. Buy on Binance, send to the chosen exchange, sell.
Income = $100 minus fees.
Pitfalls in my opinion
- Fees. High fees can eat up all the profits.
- Delays. While you are transferring, the price may change.
- Withdrawal limits. Some exchanges limit amounts.
- Risks of account freezes. Regional restrictions or suspicions of fraud.
Arbitrage is a real opportunity to earn… or am I wrong?
I want opinions from experts ☺️