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Crypto Arbitrage Opportunities

Buying a crypto asset at a lower price and selling it at a higher price sounds like an easy deal, right? But is it? We assure you that crypto arbitrage opportunities are real and open to everyone.

In this article, we are going to discuss how to find the best ones.

Understanding Crypto Arbitrage

Essentially, crypto arbitrage is buying an asset at a lower price and selling it at a higher price.

Suppose there’s Exchange A and Exchange B. The former is a major crypto exchange with high trading volumes. The ETH price on this exchange reaches $1,500.

Exchange B is a smaller one with relatively modest trading volumes. The price of ETC on Exchange B is $1,495.

This price gap calls for a crypto arbitrage opportunity if there is news that may cause a surge in buys. The larger exchange will react faster to a dramatic change in the market, with the crypto asset price surging rapidly. The smaller exchange, however, will be slower, with the asset price rising slowly.

This is your chance as a potential arbitrageur. In this case, you’ll need to buy ETC on Exchange B, transfer your coins to Exchange B, and sell them there – simultaneously.

A Guide to Crypto Arbitrage will tell you everything you’ll ever want to know about this trading method.

How to Find Best Crypto Arbitrage Opportunities?

The how-to is the focus of our article, so let’s get to the point without much fuss.

  • Diversify

Betting too much on a particular coin or exchange has never done anyone any good. Trading more coins on more crypto exchanges at a time is what you should do.

  • Use automated bots

To simplify the monitoring of information from different exchanges and executing trades, we recommend you to use automated bots.

What are crypto trading bots? In short, these are computer programs that create and submit buy and sell orders to exchanges based on the rules of a pre-defined trading strategy. For instance, a bot can be used to sell BTC when its price reaches a certain limit.

Amazingly, many great bots are available for free. But don’t run from the paid options, explore them as well.

  • Use crypto arbitrage spreadsheets and other tools

These tools are another helping hand in the vast multitude of exchanges, ever-changing prices, and various crypto assets.

Spreadsheets and tools for crypto arbitrage trading will help you make faster and more weighed decisions.

  • Engage in different types of crypto arbitrage

Simple arbitrage is the most common type of arbitrage and involves buying and selling the same crypto asset on separate exchanges – simultaneously.

Triangular arbitrage involves trading between three different currencies. For instance, you buy ETH for XCM, sell ETH for EUR, and then exchange EUR back to XCM.

Convergence arbitrage, which is a complicated strategy, is more suited for experienced traders. In short, this type of arbitrage involves buying a crypto as an undervalued asset and short-selling it as an overvalued asset. When – and if – the prices meet at a median price, the arbitrageur takes double profit.

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