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Leveraging price differences for profit using cryptocurrency arbitrage
As a child, you could mow your neighbor’s yard, earning some decent money to buy whatever you wanted by the end of the summer. Fast forward to today, you’ve discovered a different kind of mowing — crypto arbitrage. Just like mowing, it involves minimal effort and a small amount of risk, but it’s a smart way to make money. In this blog, I’ll explain what crypto arbitrage is, how it works, and whether you can profit from it.
Understanding Arbitrage
Arbitrage in the crypto world is like buying low and selling high but with a twist. You aim to buy cryptocurrency in one place and quickly sell it somewhere else at a higher price. It’s not about predicting price movements. It’s about exploiting price differences between crypto exchanges.
Why Does Crypto Arbitrage Happen?
Liquidity variances between crypto exchanges are at the heart of arbitrage opportunities. Each exchange has its supply and demand dynamics, which impact crypto prices. Sometimes, a crypto’s price on one exchange varies by a few dollars from another. This is where the arbitrage opportunity arises. It’s a bit like finding a seller who is selling the house for $500,000 and finding a buyer who is willing to pay $600,000 for the same house. It’s with minimal…
