Arbitrage
Profiting from price differences of the same cryptocurrency across different exchanges or markets.
Explained Simply
Arbitrage is buying crypto on one exchange where it is cheaper and selling on another where it is more expensive. Price differences arise from different liquidity levels, regional demand, and processing speeds. While theoretically risk-free, crypto arbitrage faces practical challenges: transfer times, fees, withdrawal limits, and the risk that prices change during the transfer. Sophisticated traders use bots and flash loans for atomic arbitrage within DeFi. Manual arbitrage opportunities are increasingly rare due to competition.
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