If you’ve never heard of the term “crypto arbitrage” before, prepare to do so because it’s about to take the crypto world by storm. Crypto arbitrage is a largely automated way to make money from cryptocurrencies and it’s nothing short of revolutionary. It’s also one of the best and safest ways to make money as a crypto investor. But you do have to know how it works before you start trading as it does have some risks and limitations. Let’s take a look at what crypto arbitrage is exactly and how you can make money from it.
What Is Crypto Arbitrage?
In the world of business, arbitrage usually refers to the act of getting a product or service at a low price and flipping it for a higher price. Pretty simple, right? But how can you do this with crypto?
Well, it’s pretty simple with crypto too. In case you didn’t know, there are discrepancies in price between crypto exchanges and these discrepancies can sometimes be large enough for you to make a good profit. You could literally find an underpriced coin in one exchange and instantly flip it on another exchange and keep the difference. This makes crypto arbitrage a virtually risk-free way to make money with crypto, assuming you do it correctly.
There are two main ways to earn through arbitrage. You can do direct arbitrage by buying one crypto on one exchange and reselling it on another one, or you could do triangular arbitrage and take advantage of price discrepancies between specific crypto pairs.
Arbitrage can be done manually or automatically. You could look up arbitrage sites and perform trades yourself, but that’s not a very efficient way to do this. The way most people make money through arbitrage is by using cryptocurrency bots to identify gaps in prices and make transactions. Coygo is an example of a crypto arbitrage trading platform that you can try. These allow you to find opportunities fast and easily and capitalize on them quickly.
If you want to make money through arbitrage, you should know that most of the best arbitrage opportunities are on smaller little-known exchanges. These will be more likely to sell coins way under market value. You do have to know which exchanges you can trust and choose a tool that will allow you to access them.
Choosing the right exchange is extremely important as you never know what could happen. Smaller exchanges are less reliable, and you never know when one might freeze or disappear. This is why you always have to keep some margin of error.
Crypto arbitrage could be a great alternative to regular trading and is less risky than holding coins long term. If this is something that interests you, we suggest that you look into it more in detail and learn the ins and outs of the technique before you start.