How to start earning from price differences: a complete guide to crypto arbitrage

Everyone engaged in digital asset trading aims to minimize risks while maximizing profits. Crypto arbitrage is a proven way to exploit market inefficiencies to your advantage. Unlike volatility speculation, here you find the same cryptocurrency traded at different prices on various platforms and profit from this difference. Sounds simple? In practice, it requires speed, accuracy, and a systematic approach.

The essence of crypto arbitrage in two words

Crypto arbitrage is buying an asset at a low price on one exchange and simultaneously selling it at a higher price on another. Profit is the difference between these prices minus all fees. Example: Bitcoin costs $57,000 on an international exchange but $60,000 on a Korean platform. The $3,000 difference per coin is a potential income.

However, execution speed is crucial here. The market doesn’t wait: as soon as you notice a discrepancy, it can disappear within seconds. That’s why experienced traders use automated bots and specialized tools.

How exactly does cryptocurrency arbitrage work

Price discrepancies arise due to differences in trading volumes, liquidity, and sentiment across exchanges. Each platform has its own audience, operational timelines, and withdrawal restrictions.

Imagine this situation: Exchange A trades 100 BTC per hour, while Exchange B only 10. Demand on Exchange B is higher, so the price there rises faster. This creates arbitrage opportunities.

Historically, the so-called “Kimchi premium” is known—a phenomenon where cryptocurrencies in South Korea are traded more expensively than on global markets. This is related to local capital export restrictions and high demand for digital assets among Korean investors.

Types of arbitrage that exist

Inter-exchange arbitrage — the most popular type. You buy on Exchange A, sell on Exchange B. Simple and straightforward.

Spot-futures arbitrage (carry trade) — exploiting the price difference between the spot market and futures contracts. You open opposite positions and lock in the difference.

Triangular arbitrage — trading three cryptocurrencies on one exchange to profit from their mutual price discrepancies.

Statistical arbitrage — using complex algorithms and historical data to find patterns and anomalies in pricing.

Step-by-step process of finding and executing arbitrage

First step: identifying opportunities

Start by continuously monitoring prices across multiple exchanges. Specialized scanners track quotes in real-time and send signals when significant discrepancies are detected.

It’s important not just to see the price difference but also to evaluate whether it’s worth exploiting. Consider:

• trading volume (is there enough liquidity to close the position)
• network fees (if transferring cryptocurrency between exchanges)
• trading fees
• the time required to complete the operation

Second step: calculating profitability

Suppose you find a $1,000 discrepancy. But you need to subtract:

• Purchase fee: 0.1% = $10
• Sale fee: 0.1% = $10
• Network withdrawal fee: $5-$20 (depends on network congestion)
• Slippage during execution: $10-$50 (price may change during the transaction)

Total: profit could drop from $1,000 to $900-$950 after all expenses###. That’s less attractive.

( Third step: quick execution

Speed is everything. Use:

• high-frequency trading platforms
• trading bots with API integration
• a stable internet connection with low latency

Many professional arbitrageurs use bots that scan dozens of crypto pairs across multiple exchanges simultaneously and execute trades automatically within milliseconds.

Risks you will face

Volatility and liquidity — the window of opportunity can close within seconds if the price suddenly changes. Low liquidity means your order might be filled at a worse price than expected.

Fees — they can eat into your profits entirely. Especially network fees )gas fees### for transfers between exchanges.

Technical failures — delays in execution, connection outages, or API errors can lead to losses.

Regulatory changes — regulators are constantly tightening rules. Tax obligations, trading restrictions, or bans on certain operations can impact your strategy.

What you need to get started

( Develop a strategy

Before starting:

• determine your risk tolerance
• allocate specific capital for arbitrage
• decide whether to trade manually or use bots
• choose the type of arbitrage that suits you
• calculate how often you will open positions )remember: more frequent trading = more fees###

Manage risks properly

• Diversification — don’t put all your funds into one crypto pair
• Take profit and stop-loss — automatically close positions at target prices or losses
• Position size — don’t risk more than you’re willing to lose in one trade

( Choose the right tools

You need:

• a real-time price scanner with access to data from multiple exchanges
• a trading bot supporting API
• integration with several exchanges
• backtesting feature )testing your strategy on historical data###

Choose exchanges wisely

Look for platforms with:

• low trading fees
• high liquidity
• reliable security systems
• a wide range of trading pairs

The reality of crypto arbitrage in 2025

Crypto arbitrage offers interesting opportunities, but don’t overestimate its simplicity. The market is highly competitive: thousands of bots and professional traders operate there. Therefore, profits from individual trades are often small—around 0.1%-0.5% per operation.

But it’s precisely this “boring” stability that makes arbitrage attractive. If you can make 10-20 trades a day with 0.2% profit each, your total income can be significant.

The key to success is a combination of technical knowledge, fast execution, and constant adaptation to changing market conditions. Start by studying the market, test your strategy with small amounts, and then gradually scale up.

Frequently Asked Questions

Can a beginner make money?
Yes, but it will require time for learning and initial capital for testing. Many beginners start with small amounts and gradually increase volumes.

Is it legal?
It depends on your jurisdiction. In most countries, crypto arbitrage is permitted, but taxes on trading profits may apply.

How much can I earn?
It varies. Profitability depends on market conditions, the quality of your strategy, and execution speed. Don’t expect quick riches—this is a long-term game.

Is it risky?
Like any trading. But due to small sizes of each trade and a systematic risk management approach, crypto arbitrage is considered one of the less risky trading methods.

Is experience necessary?
Helpful, but not mandatory. The most important thing is to understand how the cryptocurrency market works and be willing to learn from mistakes.