What is cryptocurrency arbitrage?

Cryptocurrency arbitrage is a strategy in which investors buy a cryptocurrency on one exchange, and then quickly sell it on another exchange for a higher price. Cryptocurrencies trade on hundreds of different exchanges, and often the price of a coin or token may differ on one exchange versus another.

How can crypto arbitrageurs profit off of market inefficiencies?

There are several ways crypto arbitrageurs can profit off of market inefficiencies. Some of them are: Cross-exchange arbitrage: This is the basic form of arbitrage trading where a trader tries to generate profit by buying crypto on one exchange and selling it on another exchange.

What is arbitrage trading?

This is the type of arbitrage trading in which you simply buy from one exchange and sell on another. It involves only two exchanges. Since arbitrage trading of this type depends on the real-time prices of assets, it is impractical to buy assets on one exchange and transfer them to another exchange to sell.

Why is crypto trading so expensive?

Related to this, some crypto exchanges are bigger than others, with higher trading volume. Thus the supply and demand on one exchange could be quite different from another, affecting the price. Finally, crypto trading fees also vary, and can add to the cost of your trades. What Types of Arbitrage Exist?