Arbitrage
The practice of buying a digital asset on one exchange and selling it on another to profit from price differences.
What is Arbitrage?
Arbitrage in the digital asset space involves exploiting price discrepancies for the same asset across different exchanges or markets to generate profit. For example, if Bitcoin (BTC) is trading at $38,000 on Exchange A and $40,000 on Exchange B, a trader can buy BTC on Exchange A and sell it on Exchange B, pocketing the $2,000 difference per BTC, minus fees. This practice is common in crypto due to fragmented liquidity, varying exchange fees, and market inefficiencies, particularly in volatile or low-volume markets. Arbitrage opportunities are often fleeting, as prices align quickly due to automated trading bots and high-frequency traders.
There are several types of arbitrage in crypto: spatial arbitrage (across exchanges, as in the example above), triangular arbitrage (exploiting price differences within a single exchange using three assets, e.g., ETH/BTC, BTC/USDT, ETH/USDT), and cross-chain arbitrage (between blockchains, like Ethereum and Solana). Tools like CoinGecko or CryptoCompare help identify price disparities, while DeFi protocols like Uniswap enable on-chain arbitrage via automated market makers (AMMs). Data from 2025 shows arbitrage bots account for significant volume on DEXs, with Uniswap alone processing over $
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Arbitrage
The practice of buying a digital asset on one exchange and selling it on another to profit from price differences.
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