How to earn on cryptocurrency arbitrage: breakdown for beginners

In 2025, there are a huge number of ways to make money from cryptocurrency: from simple HODL and staking to mining complex trading strategies, such as leveraged trading on crypto exchanges. However, not all of them are equally easy to use. For example, mining requires large financial investments and technical knowledge. And leveraged trading is quite risky, as there is a risk of losing many times more than was invested.

Against the background of all types of earnings on cryptocurrency, it is arbitrage that qualitatively differs.

What is cryptocurrency arbitrage?

Cryptocurrency arbitrage is a game of price difference in the world of trading. This strategy allows you to capitalize on temporary discrepancies by purchasing an asset and selling it instantly in another market or trading pair at a higher price.

Traders use arbitrage to take advantage of these price differences, profiting from the spread.

For example, you can buy 200 SOLs at $149 on one exchange and sell 200 SOLs at $153 on another exchange just a couple minutes later. The resulting difference is the arbitrageur’s earnings. in fact, it is a kind of sale at a markup, only instead of conditional points of premium brands, you sell cryptocurrency.

This price difference is formed due to the balance of supply and demand. That is why arbitrage has become so popular in the world of cryptocurrencies, because the main characteristic of this market is its decentralization. After all, each trading platform is a separate system with unique pricing.

For example, if on one exchange a large whale sells a big amount of even the least volatile currency (for example, BTC), it will significantly affect its rate on this resource.

For example, if the owner of the largest BTC wallet with 252,597 bitcoins sells half of its assets, it can significantly lower the price of this asset on the site. How much – depends on the total liquidity, the number of trading pairs and many other factors.

You can track large transactions on services like Unusualwhales.com, where you can find all large transactions with a mention of the pair and the cryptocurrency exchange where the purchase or sale was made.

However, tracking such transactions manually is not always convenient, because it requires constant involvement in the process. To solve this problem, there are certain bots and other tools, which we will talk about a little later.

History of cryptocurrency arbitrage

Cryptocurrency arbitrage began to gain momentum with the appearance of the first digital assets, which were distributed on a small number of cryptocurrency exchanges with little liquidity. In 2013-2016, earnings on cryptocurrency arbitrage were minimal, as the difference in the value of the same bitcoin or ether could not reach even a dozen percent. And the absence of large market makers only aggravated the situation.

Since 2017, all large transactions have been mostly carried out by whales and market makers, especially on centralized exchanges. With more power and assets, these large arbitrageurs were able to influence the price change within a single crypto exchange quite strongly.

Billions in bitcoin arbitrage: the case of Sam Bankman-Fried

One of the most striking examples of large-scale arbitrage trading was the case of former FTX CEO and co-founder of Alameda Research Sam Benkman-Fried. He invested about a million dollars in his own company, which from the start began arbitraging cryptocurrencies, focusing mainly on bitcoin.

The future founder of FTX rightly pointed out that bitcoin was growing in market volumes. This in turn meant that prices would vary widely, making it ideal for arbitrage to take advantage of price differences.

One of the opportunities he took advantage of was the so-called “kimchi premium.” While the price of BTC in the U.S. was around $10,000, it was trading for $15,000 in Korea due to huge demand.

At the peak, the price difference could reach as much as 50%. However, it was not possible to scale the arbitrage much due to the highly regulated nature of the Korean won.

Sam Bankman-Fried admitted, “A lot of people have found a way to do it (arbitrage in Korea, editor’s note) on a small scale. It’s very, very difficult to do it on a large scale, even though the Korean won trade volume is billions of dollars a day, because you can’t easily unload Korean won for fiat.”

It was then that the management of Alameda Research decided to focus on the more promising Japanese cryptocurrency market.

The fact is that in 2017-2018 there was a 10% gap in the price of digital gold in the US and Japanese markets, which was noticed in time by Bankman-Fried and his team.

At the peak of its form and activity, the company was executing bitcoin transactions of up to $25 million every day.

After buying a bitcoin for $10.000 in the U.S., investors could send it to a Japanese exchange. There, they would sell it for 11.500 Japanese yen. At that point, they converted that amount back into dollars.

What is P2P arbitrage?

P2P (peer-to-peer) arbitrage is the buying or selling of cryptocurrency assets between market participants. P2P arbitrage opens up new opportunities for profit, as the price in such transactions is negotiable and favorably differs from the generally established rate.

For example, you can go to Binance, buy bitcoin and sell it profitably there, opening the section with P2P transactions, choosing the most profitable option for yourself.

If you are already an experienced participant in the cryptocurrency market, you can open a bid to buy or sell a digital asset yourself. In this case, only you are responsible for the safety and success of the transaction. Along with this, you also set the desired price yourself.

What is the benefit of buying at an inflated price from those who turn to you? P2P transactions are usually popular with those who do not want to go through verification and provide a lot of documents, want to avoid withdrawal fees or are looking for a way to exchange for a rare cryptocurrency.

Thoroughly research a few of the best P2P platforms, their terms and conditions, and the benefits for buyers and sellers before opening an application.

Benefits of cryptocurrency arbitrage

Low risks

You get income without fear of price collapse, as the transaction takes place in the shortest possible time. The price will not have time to change significantly in such a short period, which makes cryptocurrency arbitrage much safer than other types of trading or simple staking.

Speed

Your task is to execute the transaction as quickly as possible, because quotes are quite volatile. And to execute a trade in a matter of minutes you may need the help of arbitrage trading bots, scanners and other specialized software, which we will talk about a little later.

Low entry threshold

You can start earning with any amount, which is limited to the minimum purchase amount on the cryptocurrency exchange itself.

For example, if you plan to buy ETH on Binance with a bank card, which can be done absolutely easily without additional verification, the minimum amount will be 0.04 ETH (approximately $15). If we are talking about trading pairs or P2P platform, you can count on smaller amounts here.

Cryptocurrency arbitrage: types, popular schemes and methods

At the moment, there are several types of cryptocurrency arbitrage – intra-exchange, inter-exchange and international.

Arbitrageurs have managed to develop a huge number of schemes for earning money on the difference in exchange rates. We will look at examples based on the most popular patterns.

Intra-exchange arbitrage

Intra-exchange (synthetic) arbitrage is buying and selling cryptocurrency on the same platform. It’s no secret that quotes of digital assets often differ within a single exchange as well.

For example, you can buy 20 ETH at $1742 on Binance, then exchange it for 231.99 SOL, and then sell 231.99 SOL by finding any matching pair with this cryptocurrency, which will bring you income after the exchange.

A variation of this type of exchange is triangle arbitrage, where the initial and final currency match. For example, if you notice a mismatch in the rates of BTC, USDC and ETH, you can first exchange BTC for USDC, then USDC for ETH (provided that the rate is favorable to you and the difference is more than 3%), and then ETH again for USDC.

For successful implementation of this strategy you will need a quick reaction to market changes and accurate calculation of commissions.

This scheme is not quite convenient for beginners, so specialized bots are often used for its implementation.

The next type of arbitrage is much more suitable for beginners.

Inter-exchange arbitrage

Inter-exchange arbitrage (or playing the inter-exchange spread) is buying cryptocurrency on one platform with a one-time resale on another.

The spread is the difference between the best price to sell and buy a cryptocurrency. As a rule of thumb, the greater the capitalization and liquidity of a cryptocurrency, the smaller its spread. However, transactions for large amounts can move the price significantly to one side or the other. Here everything is simple: you buy cryptocurrency on one exchange at a lower rate and sell it on another at a higher rate.

The scheme itself is simple, but here you may encounter the fact that the top cryptocurrencies are very sharply sagging or on the contrary shoot up in price. In order not to miss such a rare moment (otherwise your income will be minimal) you will have to resort to using the above-mentioned sites like CryptoCompare, CoinGecko, CoinMarketCap or special bots to find an arbitrage window or initially choose a less liquid asset.

Cryptocurrency arbitrage example

So, before making an exchange, make sure that the difference in the price of your chosen cryptocurrency is at least 3% (otherwise your income will not be high enough).

Let’s take ETH: its price on the Kraken crypto exchange is about $1743, and on the Yobit exchange it’s as much as $1843. $1843/$1743*100% = 5.7%. This is an excellent result, which is much higher than the 3% required by the default.

Before we start the transaction, let’s go to the Yobit exchange to make sure that the cryptocurrency price aggregator had an up-to-date price.

So, first, we need to buy 0.1 ETH on the Kraken exchange for $174.3. To do this, we will need to pay a 0.2% commission. $174.3 * 0.2 = $3.486.

0.1 ETH – 0.2% = 0.0998 ETH ($170.8 after deducting the commission).

Next, we move on to the Yobit exchange. Remember that now you pay not only for the exchange, but also for the withdrawal. 0.0998 ETH * $1843 = $180.614. $180.614 – $170.8 = $9.814.

So, after selling 0.0998 ETH at the rate of $1843, we got $9.814 net profit. That’s a pretty good start.

International arbitrage

International arbitrage involves trading crypto assets using exchanges around the world. To do this, you’ll need access to local payment methods and fiat currencies. This option is also not the most convenient for beginners.

However, this method can be a great help for those who understand global cryptocurrencies and know where to make money on the difference of cryptocurrencies.

Above we have already mentioned the experience of Sam Bankman-Fried, who earned billions on BTC arbitrage in the US, Korean and Japanese markets. However, the difference in exchange rates is present in other countries as well.

For example, right now one bitcoin is worth 350.551 PLN (Polish zloty). Converted to USD, this would be about $93021.

Considering that the current exchange rate is $93142, the difference of $121 is significant enough to try using this method.

This way you can buy bitcoins through a P2P exchange, convert your national currency into Polish zloty, sell bitcoins for the national currency and earn on the difference in exchange rates. The undeniable advantage of this method is that the spread, and therefore the arbitrage window, can last up to several months, which opens up unlimited opportunities for earning. However, at the same time, such conversions can take up to several days.

That’s why a service like Coin24 can be a great assistant in this type of transfers. Our online cryptocurrency exchanges are automatic, allowing you to buy, sell or exchange Bitcoin, Ethereum, Litecoin and other cryptocurrencies at any convenient time.

If you need a fast exchange, Coin24 is perfect for you as exchanges are 24/7.

Useful tools for cryptocurrency arbitrage

One of the main advantages of the cryptocurrency market is its transparency, which makes it easy to track any transactions on any crypto you are interested in.

Information about any asset can be regularly collected and analyzed in order to assess the overall arbitrage potential. Crypto market participants have long utilized several types of popular tools called scanners to facilitate tracking market opportunities.

Data aggregators

Useful resources such as CryptoCompare, CoinGecko, CoinMarketCap, and Cryptorank Arbitrage allow you to stay on top of all rate changes for the cryptocurrencies you’re interested in across different trading pairs and crypto exchanges. You can also use Dexscreener to track the best pairs in the market (Gainers).

Scanner bots

This is an even more advanced way to keep your finger on the pulse of all price changes in the cryptocurrency market. Scanner bots monitor the prices of digital assets on different platforms automatically. Once a price difference has been detected, they immediately alert you with a notification.

Good bots take into account many factors, including the availability of the pair in both markets, as well as liquidity, which is very important. Liquidity (the density of the exchange stack) determines how quickly you can make a cryptocurrency exchange. The higher the liquidity on the platform, the less price fluctuations there will be and the more likely you will be able to quickly exchange cryptocurrency at the current rate without large price fluctuations.

That’s why you should pay attention only to trusted exchanges like Binance, Coinbase Exchange, Kraken, KuCoin, ByBit, OKX, etc.

Arbitrage trading bots

If you don’t have the money to do arbitrage manually, this method is perfect for you. Arbitrage trading bots also scan prices automatically, but they also execute the trade via API.

There are many ready-made solutions of such trading bots with different functionality and prices. We advise you to thoroughly familiarize yourself with the set of options before buying, because often beginners may not need bots with complex functionality, where you will pay for unnecessary stuffing.

What are the dangers of arbitrage?

One user at X wrote “Arbitrage in cryptocurrencies is like trying to catch a pig in lard at a village fair. The chaos is real, but so is the thrill.”

In many aspects this statement may be true, because behind the easy profits there are also many pitfalls.

• There is a risk of losing funds or not having time to record a profit if the exchange delays withdrawal or input of funds, or temporarily disconnects access to wallets.
• There can be sudden collapses in the exchange rate of cryptocurrencies, which can lead to losses.
• Sometimes you have to wait a long time for the right moment for arbitrage due to market instability.
• There are also risks associated with a lack of experience or mistakes due to inattention of novice traders.

Since it is impossible to make good money on minimum investment amounts, arbitrageurs often have to make transactions with large volumes.

Is cryptocurrency arbitrage legal?

Cryptocurrency arbitrage is perfectly legal as long as you comply with all regulatory requirements on the platforms you use. For example, you may need to verify your identity or the origin of your funds.

You should not use anonymization tools, as there may also be problems with them.

We also advise you to study in advance the platform’s policy regarding the possibility of using trading bots and other arbitrage tools.

Conclusion

Cryptocurrency arbitrage is a great way to make money on cryptocurrency even if you have just entered this sphere. The simplicity of the process, minimal risks and entry amount allow anyone to enter this field.

Despite the fact that this niche is now significantly occupied by market makers, whales and trading bots, simple traders continue to earn income in it using automated tools.