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Author: Admin | 2025-04-28
This article will explain what is cryptocurrency arbitrage and how to use it in trading. We will present some examples for better understanding and practice. Let’s get started!Cryptocurrency ArbitrageBack in the day, the only cryptocurrency and exchange/wallet known to the public was Bitcoin and Coinbase, respectively. The features and popularity of Bitcoin led to the introduction of many other coins and crypto exchanges. Unlike traditional centralized exchanges (ex: NYSE), crypto exchanges have their own price of tradable cryptos. In simple words, for a given cryptocurrency, two crypto exchanges typically do not have the same price. But why? In any exchange, the price of a cryptocurrency is determined by the last traded price on that exchange. Since the buyers and sellers are different in each exchange, it is obvious that the price will not correlate completely between all the exchanges.So, having understood that there are always price differences among exchanges, have you ever wondered that these price changes could be taken advantage of? And how you can potentially make money from Bitcoin and other cryptos? Hence, the concept of cryptocurrency arbitrage comes in. Getting Started with Crypto ArbitrageCryptocurrency arbitrage is about smartly exploiting the prices of cryptocurrency between exchanges. Crypto arbitraging is simple – a cryptocurrency is bought from one exchange and sold at another exchange immediately. The trader buys crypto from an exchange where the price is relatively lower than the other exchange to make a profit off it. Thus, the profit generated is equivalent to the difference between the
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