Cryptocurrency Arbitrage: Everything You Need to Know For 2022

When done successfully, cryptocurrency arbitrage can literally mean making money out of thin air. But done wrong, it can mean losing huge sums, so make sure you know what you’re doing before you dive straight in.

What Is Crypto Arbitrage?

Crypto arbitrage means buying cryptocurrency on one exchange and selling it for a higher price on another exchange, allowing you to make a profit.

Types of Arbitrage

1. Spatial arbitrage 2. Convergence arbitrage 3.Triangular arbitrage

Why is Arbitrage Possible?

- Variations in liquidity - Different exchange types - Withdrawal and deposit times

How to Arbitrage Cryptocurrency

The principle of crypto arbitrage is one thing; putting it into practice is quite another.

Spatial Arbitrage

If you opt for spatial arbitrage, you’ll buy crypto on one exchange, transfer it to another exchange, then sell it on the other exchange.

Convergence Arbitrage

This type of arbitrage involves a long/short trade. Here the arbitrageur buys underpriced crypto (“long”) and simultaneously sells overpriced crypto (“short”).

Triangular Arbitrage

If you’re opting for the even more complicated triangular arbitrage, you’ll basically just need to do a more complex version of the above methods by transferring between three different cryptocurrencies instead of just two.

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