Crypto Arbitrage: Is It Too Late?

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By: Scam Risk - Expert Reviewer

Cryptocurrency arbitrage is about having the ultimate leverage when it comes to prices in the market and using it to your advantage. 

Crypto trading has been around for a while now…but the prices of these cryptocurrencies vary from one exchange to another like any other “real” currency would. 

These different crypto exchange points have a different value attached to each of the cryptocurrencies for a variety of reasons. 

With all that said, this crypto arbitrage opportunity allows traders from all of the globe to take advantage of the price difference of a buy order cryptocurrency from one exchange and turning right around and doing a sell order to another exchange right away for profit. 

Crypto arbitrage works wonders for everyone.

Cryptocurrency trading and the crypto space is pretty difficult in general because of just how many risks are involved. 

I mean if you find the regular stock market volatile, you may not want to get involved with the crypto market because it’s just that much more unpredictable. 

NO ONE will ever know when the prices may soar or come crashing down. 

If you want to become a successful crypto trader, or even make some crypto trading bots with your methods in mind…you will need to become an expert at analyzing price charts.

Crypto arbitrage opportunities are everywhere, but you need to have a solid strategy and beware of the potential downsides from crypto trading. 

We all know that we want to score that crazy profit margin…but the truth is crypto prices vary so quickly it’s hard to lock in those profits when we see them.

In this review…

We’re going to review Crypto Arbitrage to decide if cryptocurrency arbitrage really is legit.

We’ll talk about whether cryptocurrency arbitrage is the right online business for you.

At the end, I’ll answer some of the most frequently asked questions regarding Crypto Arbitrage and cryptocurrency arbitrage in general.

And most important, I’ll show you the exact system I used to build my own internet marketing business to over $50,000 a month in mostly passive income.

This system made me swear off cryptocurrency arbitrage for good, because it uses some of the same skills in a much more powerful and profitable way!

Check Out This Simple Way To Run A Digital Real Estate Empire Online
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Table of Contents

Cryptocurrency Arbitrage: What's It All About?

Crypto arbitrage opportunities are just like regular arbitrage plays you would make on the stock market or even with free market capitalism in general. That is buying and selling one asset on different markets so that you can make a profit.

What does it look like?

Let’s say that bitcoin is available for a higher price on one exchange compared to another. You can buy the BTC on the cheap exchange and sell it right away on the more expensive exchange and pocket the difference.

By thorough data analysis, you may different opportunities arise thanks to price differences that may be from a rapid rise in the trading volume. 

You see, these small platforms follow the bigger platforms leads with cryptocurrency prices. But it doesn’t happen instantly and this is when investors take advantage with arbitrage trading.

Just like real markets, the bigger exchanges tend to offer the better prices. That leaves small exchanges across the globe always having to play a little bit of catch up so they can earn their transaction fees. 

It’s worth noting though that prices differ based on supply and demand so these different smaller changes have the potential of being more stable.

You can play arbitrage so long the crypto markets are not even with each other. You will find that their are two main types of arbitrage:

  1. Arbitrage between exchanges (aka Triangular arbitrage)
  2. Arbitrage within the exchange

Most of you are probably familiar with the idea of taking advantage of the arbitrage play between two different exchanges. But, if you are looking to make a purchase and sale within the same exchange then you need to sell when there’s a price difference in your favor. 

But again, I must warn you…a trader looking for a crypto arbitrage play needs to make sure and take into account all the risks and their potential value, one way or another.

Aside from triangular arbitrage another not so well known arbitrage method is cross border arbitrage and it is exactly as it sounds. 

Now you can use triangular arbitrage with it as well. But in doing so you add an extra level of difficulty with foreign nations. However the benefits may not outweigh how quickly things. Not too mention the statistical arbitrage which gets even riskier since it’s modeled after math that is constantly changing.

How Does Cryptocurrency Arbitrage Work?

So now that we know arbitrage can be caused by several different market factors. let’s talks a little bit about one of the biggest factors…trading volumes between exchanges.

As you can imagine, bigger exchanges have high trading volumes of cryptocurrencies. With all those exchanges, the prices can be lower. On the other hand, smaller exchanges struggle to keep their price of crypto low since trading volume is minimal at best.

Crypto arbitrage can also occur when a coin is listed on popular exchanges such as coin base. Price difference can also be accounted for thanks to various locations. Some people have even found out that there are easier times to buy or sell just based off the time of day!

To be successful at arbitrage across exchanges in different markets you need to look for your golden opportunity. When you find the source of this golden opportunity, you need to take advantage of it right away and document it in your exchange order book.

Unfortunately, major coins like bitcoin take up to 20 minutes to confirm your transaction! That means when buying and selling your coins it is quite possible that you could see price differences in the current market that will lead to less of a profit for you once your sell order is confirmed.

It’s quite likely that you can find programs or trading bots to do the crypto arbitrage for you…but there are several risks to know about when using crypto trading bots. For example, your bot is only as good as you program it. It will run forever on what you tell it to do. Now this can be great, especially if you’ve found a winning strategy…but we all know the market is volatile and can change at any moment.

This means that your arbitrage opportunity and strategy can be hosed at any moment and your bot won’t know any better. If you do not take action quickly, you could lose a lot of money.

Can You Make Cryptocurrency Arbitrage Profitable?

While writing this review we’ve noticed a $4 difference in the price of 1 BTC on two different exchanges that are popular in their own right. However, this means that you can earn $10-$50 a day, and if you focus on 10-12 of the bid ask spread each day…then you can make close to $1,000 a week! Although, it’ll probably be very stressful and you might even run into a limit order with your service provider.

But if you want to make money with crypto arbitrage, you first need to make sure and have the right tools and knowledge. For example if you want to take advantage of an opportunity you see with EOS, then you need to check the current market price, bid price, and ask price. A good trader will always know his numbers in every arbitrage opportunity.

Sounds like a head ache huh?

But it get’s worse…

Every move of arbitrage that is made will increase the price of the crypto at the exchange you bought it from. This causes the prices to then move closer together, making it difficult for the next trader to profit…which might very well be you!

When we were in the early days of crypto, trades were manually done. But with an increase of technology, we have seen computers dominate the game. Crypto arbitrage has become increasingly more difficult because of the speed at which everything occurs. This is why some people are beginning to wonder if crypto arbitrage is on its way out…

So how to do you know when you’re going to have a chance at crypto arbitrage? Well first things first you need to be able to recognize the differences across different exchanges. This means you need access to multiple stock exchanges at once.

Luckily the cryptocurrency exchange operates at all hours of the day so you’ll have access to more data points. It might even be worth some of your time to invest in building a trading bot to buy and sell currencies while you’re sleeping. Of course…that comes with its own risks and the market might end up taking advantage of you that way…

If you’ve been a crypto day trader for any amount of time, then you also know as well as anyone that there really isn’t a whole lot of market movement.

Which is why you might like this asset based business model better…

Is Cryptocurrency Arbitrage Legal?

Cryptocurrency arbitrage is most certainly legal but the rate for any given cryptocurrency can vary based on the exchange that offers it. Now, even though the price is usually the same in all the exchanges that offers it, it can vary from 5% to as much as 20%.

Since there really is no standard for cryptocurrencies as the market is pretty much still in the inception stages, it can be very volatile. As a result, there are a lot more arbitrage opportunities then there are in other markets.

The opportunities for crypto arbitrage can fluctuate based on the inefficiencies of the market rather than anything that any individual or group of people do. That said, the more traders that get involved with arbitrage, the less opportunities are available since those trader virtually nix any price difference. The beauty of arbitrage is that it stabilizes the market and increases the volume of trade in exchanges.

Bitcoin Arbitrage Example

So we’ll take a look at an example of how bitcoin arbitrage works. Let’s say that we have Bitcoin listed on 2 exchanges, for this exercise we’ll use exchange Y and exchange Z.

So, imagine that Exchange Y widely known exchange and trades at a high volume with a BTC price of $10k. Exchange Z is smaller that doesn’t trade as much, but the BTC price is $10,015.

Now, imagine that the Internal Revenue Service decides that BTS deposits will be tax free going forward. You would see a huge amount of trades all over, especially in the United States. In this example, as a result of the discrepancy in trade volumes, the price difference is $15.

Of course, more people will BTC offered by exchange Y consequently driving up the price to $11,140, but the BTC price from exchange Z only goes up to $11. This opens the door to arbitrage.

Here you can go to exchange Z and buy BTC for $11k and go to Exchange Y and sell it for $11,140 and make a nice little profit of $140 for each BTC you buy.

Of course, given this scenario, we are not taking into consideration the transaction fees, processing times and the likelihood of changes in price.

Pros Of Crypto Arbitrage

Fast Profit

It’s possible to do crypto arbitrage almost immediately after your initial transactions, usually within about an hour. Obviously, this is much faster than the traditional “buy and hold” of cryptocurrency with the intent of selling later on.

Wide Range of Opportunities

Nowadays, the market has quite a few crypto exchanges and this open the door for so many arbitrage opportunities. In fact, there are nearly 400+ cryptocurrency exchanges all over the world according to data provided by Coindesk.

The Crypto Market Is Still Developing

Even though the potential is there, cryptocurrency still isn’t as accepted by the public as you might think since the crypto market is still developing. As a result, there isn’t much communication between exchanges which lends to a fair amount of confusion.

There are also a fewer number of crypto traders and less competition in the market, which leads to potential price differentials.

And since there aren’t very many crypto traders competing with each other in the market, this cause huge price differentials.

Cryptocurrencies Are Still Volatile

Even though Bitcoin was the first cryptocurrency that was launched by Satoshi Nakamoto in 2009, you probably won’t find a more volatile one in the cryptocurrencies market today. This is mainly because of supply and demand and decentralization.

And since cryptocurrencies are so volatile, the opportunity for arbitrage is so huge given the fluctuations in price among different exchanges.

Cons Of Crypto Arbitrage

KYC Restrictions

It’s possible to do crypto arbitrage almost immediately after your initial transactions, usually within about an hour. Obviously, this is much faster than the traditional “buy and hold” of cryptocurrency with the intent of selling later on.

Storing Coins

Nowadays, the market has quite a few crypto exchanges and this open the door for so many arbitrage opportunities. In fact, there are nearly 400+ cryptocurrency exchanges all over the world according to data provided by Coindesk.

Fees

Now, you have to know that these crypto exchanges have overheads and won’t allow you to do your trades for free. When calculating your profit from arbitrage, keep in mind all the different fees that come with it.

Large Trades Provide Better Profit

The profits that you make from arbitrage may not be all that earth-shattering due to the fees that you’ll pay… so if your goal is to make huge arbitrage profits, you may want to consider having huge trade volumes.

Withdrawal Limits

Make sure you know which exchanges have limits on the number of withdrawals you can make for larger trades. You may run into an issue withdrawing your crypto balance within the day.

Timing

Now, it’s likely that every cryptocurrency trade you make can take at least 10 minutes to be completed. This means that it’s possible for the market to move away from you thereby costing you your arbitrage profit potential.

There’s plenty of cases in which a trader didn’t receive a profit since there was a downturn in the market turning the profit into a loss.

Also, you could deal with one exchange from which you buy your coins and then find out that the market went a different way and you’re unable to sell your coins to a different exchange.

Slower Transactions

Given the uptake in the number of trades being made in cryptocurrency markets all over the globe, individual transactions can take a long time. This can be a big pain in the ass if you’re wanting to make a quick transfer since Bitcoin usually takes longer than ETH (Ethereum) transactions.

Competition

Since arbitrage is becoming more popular, more traders are jumping on board which causes fluctuations in trading volumes with different exchanges and cutting into the arbitrage opportunities for new traders.

Important things to know before you try it

New Listings

Keep your eyes open for whatever new cryptocurrency listings that are available. Just keep in mind that when a first time cryptocurrency is listed in an exchange, there may not be much demand for the coins in that exchange.

Avoid Transferring BTC

Bitcoin can take forever when trading them… and given that you have to trade pretty quickly in arbitrage, BTCs can seriously impede you from making a profitable trade. You might want to look into alternative coins like ETH since they’re a lot quicker.

Plan Strategically

So when you’re on the hunt for your next arbitrage deal, you want to keep in mind exactly how much money you’ll need to put into each trade.

What’s your potential profit percentage?

How much profit can you lose from the fees you’ll pay?

Have a clear and concise plan so that you can answer these questions for each arbitrage opportunity that you take on.

Keep Monitoring The Market

You can find arbitrage opportunities anywhere and anytime. So you’ll need to monitor the market so you don’t miss out.

Market volatility is a huge factor when it comes to price differences, so be sure to keep you thumb on the pulse of news and daily trends.

Diversify

Don’t limit yourself to a few trades on a few exchanges… you might not notice any arbitrage opportunities that come your way, or your opportunity for profit will be lacking.

You’ll need to trade on multiple exchanges if you want to make a good profit. This helps you avoid the pitfalls of keeping your eggs in one basket.

Limit Losses

This is not a game, they cryptocurrency market is a roller coaster so if you want to trade then do it fast and furious or don’t trade at all.

In this industry, the risks to make money may not be worth it, so it’s better to not lose your shirt than to blindly jump on an arbitrage opportunity.

Hedge Strategies

Use hedging in order to guard yourself against any market disruptions that come your way.

Although hedging can guard you from some steep losses, you may cut deep into your profits.

Imagine hedging as a sort of insurance policy that protects you from market changes.

Final Thoughts On Cryptocurrency Arbitrage

There are plenty of arbitrage opportunities that you can take advantage of no matter the market inefficiencies. The more traders that jump into the arbitrage game, the few opportunities there are. This brings stability to the market and the prices could end up being the same across exchanges.

Regarding exchanges, Zipmex is very well-known among exchanges within the crypto market. It offers low fees and the best prices for BTC, and their exchange is the most user-friendly for beginners.

If you’re from Australia or Singapore, then Zipmex won’t charge you fiat withdrawal fees. You only have to pay a measley 0.2% for any buy and sell trades, which is unheard of in the market.

Crypto deposits are virtually instant, whereas bank transfers can take up to 3 days. You can also set up a two-factor authentication process for you account for added security.

Even if your login credentials get compromised, they won’t be able to access your account. Zipmex also offers its own online wallet from which you can withdraw your cryptocurrencies.

But, when it comes to building an online business, you have plenty of options.

And even if you’re dead set on becoming an cryptocurrency trader, you’ve got way better options than Crypto Arbitrage.

But keep in mind, I don’t get paid to promote any of the programs I review. For that matter, I personally think cryptocurrency trading is a risky business model, where you end up leaving way too much money on the table.

My #1 pick proves this – and unlike Crypto Arbitrage, it actually provides real proof of real success from real people as recently as a few days ago.

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