I decided to understand the topic and am sharing my thoughts. I've heard about cryptocurrency arbitrage for a long time, but it's mostly theory; I want to grasp the practical essence.

So, cryptocurrency arbitrage is when you buy the same coin cheaper on one platform and sell it for a higher price on another. It sounds simple, but why does it actually work? It turns out that prices for the same assets can differ between exchanges due to varying numbers of traders, delays in updating quotes, and regional demand differences. An interesting scheme, don’t you think?

I read about different types. There is inter-exchange arbitrage — buying on one platform and selling on another. For example, ETH is cheaper on one exchange and more expensive on another. Then there’s intra-exchange arbitrage — when different trading pairs of the same asset are traded with discrepancies on one platform. Plus, triangular arbitrage, where you cycle through several pairs: USDT to BTC, BTC to ETH, ETH back to USDT. And also regional — buying through one exchange and selling locally via P2P for profit.

To get started, you need accounts on multiple platforms, a balance in stablecoins (USDT, USDC are most convenient), and price monitoring via CoinMarketCap or specialized bots. But here are the pitfalls that concern me. Withdrawal, deposit, and exchange fees — they can completely eat into the profit. Plus, while transferring crypto between exchanges, the price can change drastically. Some networks are slow, so it’s better to choose fast ones like TRC-20 or BSC.

Here’s a simple example. Suppose BTC costs $96,000 on one major platform and $96,100 on an alternative. Buy on the first, send to the second, sell. Profit of $100 minus all fees. It sounds logical, but when you account for all costs, the margin becomes very thin.

There’s also the risk of withdrawal limits — some exchanges impose restrictions. And regional bans, suspicion of fraud with active trading. Cryptocurrency arbitrage is a real working method, but it requires very careful calculations and understanding of all fees.

I want to hear the opinions of experienced traders — maybe I’m missing something? What pitfalls have you encountered? Is it really possible to make money on arbitrage, or is it more theory? 🤔