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Author: Admin | 2025-04-28
Often comes with lower rewards. So, people with less capital might not feel that the money they can earn from crypto arbitrage is worth the effort.Arbitrage Crypto StrategiesIt’s possible to use arbitrage trading strategies across centralized and decentralized exchanges. But the process looks different on the backend, given that trading arbitrage on centralized exchanges involves waiting for your order to be filled via an order book. In contrast, decentralized arbitrage trades execute right away since you’ll buy and sell a crypto asset already in a liquidity pool.How do you make money with crypto arbitrage? Below are some of the most popular types of crypto arbitrage trading strategies. For the sake of simplicity, we’ll use bitcoin as the crypto asset in most of our examples.Cross-Exchange ArbitrageUsing the cross-exchange method is the classical type of arbitrage. In this case, you’ll identify bitcoin selling for a lower and higher price across two different exchanges.You’ll then purchase bitcoin at a lower price and sell it at a higher price, keeping the profits.Profitable arbitrage trading can also be done on perpetual contract positions as well, and not just for spot positions. As perpetual contracts allow for leverage, which comes with a liquidation price, during periods of volatility, an exchange with lower liquidity and a big liquidation can cause the price of bitcoin to move more drastically compared to other exchanges, and an arbitrage trader can capture this difference to earn a risk-free profit. For example, on exchange A, a large liquidation has occurred, and the bitcoin perpetual contract price goes to $19,900, but on exchange B, the bitcoin perpetual contract is only at $20,000. An arbitrage trader will long bitcoin on exchange A at $19,900 and short the same amount of bitcoin on exchange B at $20,000 to remain delta-neutral. When the volatility subsides, the
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