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What is Crypto Arbitrage and How To Use It

There are different methods of making money in the crypto industry, and crypto arbitrage is one of them. Most people can get so swayed by the negative sentiment of the crypto market that they fail to see other opportunities. 

Tell someone they can profit from price differences between two exchanges, and they are unlikely to believe you. However, it is true, and many people have been using this method called crypto arbitrage to make thousands of dollars without much risk involved. 

We will discuss the meaning of crypto arbitrage trading, how to profit from the different crypto arbitrage strategies and the best platform for crypto arbitrage.


How Crypto Arbitrage Works

As said above, most people need help to believe there’s a less risky way of making money in the crypto market. This is usually because of news about how market volatility caused traders to record losses in the market. 

Nevertheless, crypto arbitrage trading is a less risky way to make thousands of dollars in the crypto market. Crypto arbitrage is the process of capitalising on the price differences recorded between two crypto exchanges to make a lot of profit. In simpler terms, it means buying cryptocurrencies at a lower price from exchange A and then reselling them at a higher price at exchange B. 

For instance, if the price of Bitcoin in a decentralized exchange is $19,000 and the price in the centralized exchange like BingX is $19,500, you can buy from the decentralized exchange and sell on BingX and make a cool profit of $500.

This process is more straightforward than day trading and requires you to research and observe price listings of a token on different exchanges. There are often price differences between centralized and decentralized exchanges, so you pick those two exchanges with price differences and capitalise on that.

Why Crypto Arbitrage is Possible and Less Risky

Crypto arbitrage is possible because people make money from different sources and need to make exchanges urgently. Rather than set a high rate, they could sell at cheaper rates to quickly sell out their huge reserve. This is where an arbitrager can profit by purchasing low and selling high. 

Due to various time zones and country regions, certain factors can cause the demand and supply for a token to be too high or too low, resulting in price differences with other parts of the world. 

Crypto arbitrage is less risky than the most popular methods of making money from cryptocurrencies, such as day trading, which requires technical indicators and extensive market  analysis.In addition, you don’t need to learn anything complex to carry out arbitrage trading. Finally, it does not take much time to profit as you only need to find a legit crypto exchange “A” to buy at a lower price and “B” to sell to at a higher price.

Different Crypto Arbitrage Strategies

Below are some of the best crypto arbitrage strategies you can use to make massive profits off the price differences on cryptocurrency exchanges. 

  • Cross-exchange Arbitrage 

Cross-exchange arbitrage is the simplest form of crypto arbitrage trading. It usually involves looking for a crypto exchange with a lower price of a cryptocurrency and another with a higher price. It is called “cross-exchange” because you can buy from the exchange with a lower price and manually sell to the one with a lower price. 

  • Triangular Crypto Arbitrage 

For this type of crypto arbitrage, three or more cryptocurrencies rather than two are traded on the same exchange to take advantage of price opportunities. This means that instead of moving cryptocurrencies between two exchanges to profit from their price differences, you exchange one cryptocurrency for another within a single exchange to capitalise on their price discrepancies. 


So, you may use three trading pairs, such as BTC/ETH, ETH/TWT, and TWT/BTC, and swap them within a single exchange to make a profit. This type of crypto arbitrage is mostly for those with more experience and technical knowledge. 

  • Spatial Arbitrage 

This is a type of crypto arbitrage strategy that occurs in two different regions; it can take place between an exchange that is located in London and another that is located in Japan. It is obvious that cryptocurrency prices are the same in different regions, so you look for exchanges with lower prices, buy from them, and sell to exchanges in regions with higher prices. 

  • Decentralized Arbitrage 

This is common among automated market makers (AMMs) or decentralized exchanges, and it mostly occurs between a decentralized and centralized crypto exchange. Those involved in using smart contracts to identify a cryptocurrency with a lower price in a decentralized exchange but a higher price in a centralized exchange So the smart contract automatically buys from the decentralized exchange and then sells to the central exchange within seconds of activation. 

  • Statistical Arbitrage 

This is a complex form of crypto-arbitrage and usually involves complex mathematical, econometric, and computational techniques to execute. Those who use this type of arbitrage trading strategy use it with different software programmes and trading bots. 

What to Consider Before Using Crypto Arbitrage 

Here are some crucial factors to consider in the success or failure of your crypto arbitrage trading journey. They include:

  • Timing 

For crypto arbitrage trading, timing is everything because the process usually takes less than an hour to complete. So you have to be very time-sensitive because the price of cryptocurrencies on crypto exchanges might change at any time. 

  • Fees 

Calculating the transaction fees, you will pay at different exchanges whenever you carry out crypto arbitrage helps you know if you are making profits or running into losses. 

  • Security of Exchanges 

Since all the processes involved in crypto arbitrage happen on a crypto exchange, you have to consider the security of the exchange you will use to carry out the trade to avoid losing all your money to hackers. 

Arbitrage Trading: How To Start a Profitable Crypto Arbitrage Business In  Nigeria


Where To Get The Best Rates For Crypto Arbitrage

Crypto arbitrage is an underrated method of making money from cryptocurrencies, and many people are yet to discover the limitless possibilities it provides. It gets even more interesting when you use an arbitrage friendly exchange like BingX.

BingX is the leading crypto exchange for buying and selling crypto at the best market price. With over 3 million users and a presence in over 100 countries, BingX is the best place to trade crypto as a beginner or expert crypto trader. 

BingX is a social crypto trading platform that offers futures, spot trading, copy trading and derivatives. You also have access to an auto trader that helps you trade crypto for easy profits.

Start your cryptocurrency trading journey with BingX today!


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