The cryptocurrency market operates 24/7, and prices can vary slightly across different exchanges. This very difference creates an opportunity – arbitrage.
In theory, arbitrage means buying cheaper on one exchange and selling higher on another.
Example:
Binance price for 1 BTC = €50,000
KuCoin price for 1 BTC = €50,300
If you buy on Binance and immediately sell on KuCoin, the profit would be about €300 (before fees).
It sounds simple, but in practice, there are many nuances you must understand.
Types of Arbitrage
1. Cross-Exchange Arbitrage (Classic)
The simplest method:
Find a price difference between two exchanges.
Buy cheaper on one, sell higher on the other.
Problem: transfer time and fees. By the time you transfer crypto from one exchange to another, the price may already have equalised.
2. Intra-Exchange Arbitrage
On some exchanges, prices differ between trading pairs.
Example:
BTC/USDT price = 50,000
BTC/USDC price = 50,200
If you have USDC, you can sell it and buy BTC cheaper via the USDT pair, then convert back.
This opportunity arises less often, but the risk is lower since everything happens within one platform.
3. Triangular Arbitrage
This involves using three currencies on one exchange.
Example:
Start with USDT.
USDT → ETH, ETH → BTC, BTC → back to USDT.
If you end up with more USDT than you started with – you’ve made a profit.
Such opportunities exist due to algorithmic inefficiencies and are usually exploited with bots, as doing it manually is far too slow.
4. Geographical Arbitrage
In some countries, demand/supply dynamics are different.
For instance, in South Korea or Nigeria, crypto is often traded at 5–10% higher because local traders are willing to pay more.
This is called the Kimchi Premium.
Things to Consider in Arbitrage
1. Fees
Every trade has a trading fee (0.1–0.2%).
Every transfer between exchanges has a network fee (e.g., Bitcoin can cost €10–20).
If the price difference is only 0.5%, fees can wipe out all profit.
2. Time
Blockchain transfers are not instant.
BTC – up to 1 hour
ETH – 1–5 minutes (also expensive)
USDT TRC20 or BSC – faster and cheaper, but risk remains
By the time you transfer, the price may already have equalised.
3. Liquidity
Some exchanges have low volume – if you try to buy/sell a large amount, the price shifts instantly.
Arbitrage only works with sufficient liquidity, but orders that are too large can move the market themselves.
4. KYC and Limits
Binance, Bybit, KuCoin require KYC (verification) to transfer larger amounts.
BingX allows partial trading without full verification, but with lower limits.
Without KYC, arbitrage with serious capital is almost impossible.
5. Taxes
Arbitrage profits are taxable – in countries where crypto is regulated, every such trade must be declared.
Practical Example (Theoretical)
Binance BTC price = €50,000
KuCoin BTC price = €50,400
Fees:
Binance trading fee = 0.1% (€50)
KuCoin trading fee = 0.1% (€50)
BTC transfer fee = €20
Calculation:
Buy on Binance at €50,000
Transfer cost = €20
Sell on KuCoin at €50,400 (–€50 fee)
Final profit = €280
If the difference were only €100, you’d already be at a loss.
Is Arbitrage Suitable for Beginners?
Short answer – not really.
In theory, arbitrage is “risk-free” profit.
In practice, it requires high speed, low fees, and automation.
Professional traders use bots and algorithms to make profits within seconds.
For beginners, arbitrage usually means small profits and a high risk of losing money to fees or price changes.
Alternatives to Arbitrage
Spot + Futures Arbitrage (Hedge) – buy BTC in the spot market and open a short futures contract simultaneously, profiting from funding rates.
Stablecoin Arbitrage – when USDT price differs between exchanges (e.g., $0.98 vs $1.01).
Fiat Currency Arbitrage – differences between EUR, USD, and other fiat deposits/withdrawals.
Conclusion
Crypto arbitrage still exists, but it’s not easy money.
To be profitable, you need:
Low fees
Fast transfers
Automated bots
For beginners, arbitrage is better seen as a learning process, not a primary income source.
Professionals with large capital and technical expertise still use it, but they operate on a completely different level – with algorithms, servers, and API integrations.