The Truth About Crypto Arbitrage: Why Everyone Says It's Simple, Yet Few Make Money

Speaking of Arbitrage, there is a saying in the forum: no risk, no threshold, easy money. But what is the actual situation? Most Newbies go through a cycle and find that they can't earn the legendary money at all.

What is Arbitrage?

In simple terms: buy cheap in location A, sell expensive in location B, and earn the difference.

BTC is $1500 on Binance, selling for $1600 on Coinbase, you buy and sell to make a profit of $100. This is arbitrage.

At first glance, there seems to be no risk — because buying and selling happen simultaneously, the price has no time to fluctuate significantly. But the key is three words: fast, volume, fees.

Speed Must Be Fast: In the cryptocurrency world, prices change every second; if you react a moment too late, the price difference is gone.

Transaction Volume Must Be Large: Arbitrage profits typically range from 3-10%. To make big money, you need to move large amounts of capital.

Costs are killers: Withdrawal fees, transaction fees, and exchange losses, after a round, the points are gone.

Why is Arbitrage Becoming More Difficult

In the early days of the crypto world, there were gold mines. In Africa in 2017, BTC was 87% more expensive at local exchanges. The “sushi premium” in Japan and the “kimchi premium” in South Korea are real arbitrage opportunities.

Why? Because at that time the market was fragmented, liquidity was poor, and there were no major market makers. Ordinary people could also take advantage.

What about now? Professional market makers and trading bots have taken over this market. They have APIs, algorithms, and millisecond-level response times—outperforming all manual operations. As soon as any Arbitrage opportunity arises, it is immediately exploited.

How to do Arbitrage

Internal Arbitrage (single exchange, different trading pairs):

• Advantages: Fast, completed in seconds
• Disadvantage: small price difference

Cross-Exchange Arbitrage (buy on Binance, sell on Kraken):

• Requires two accounts, fund transfer, and to bear withdrawal delays
• Higher costs and greater risks (prices may change in the opposite direction)

P2P Arbitrage (Over-the-Counter Trading):

• Find the price difference: BTC is priced at 100 USD on Binance, while P2P sells for 150 USD (because the user wants a specific payment method)
• Or reverse operation: buy low, sell high

DEX Arbitrage (between liquidity pools):

• Involves slippage, Gas fees, transaction order
• Much more complicated, but the robots are also sweeping here.

Actual Operation Process

A simple chain is like this:

1. Buy ETH on P2P (Price X) → 2. Transfer to the exchange → 3. Sell (Price Y) → Profit from the price difference

Complex chains may involve more than 10 intermediate links, multiple trading pairs, cross-currency, and a mix of CEX and DEX.

Key Concept “One Circle”: Completing this chain is called one circle. If the ROI is 15%, it means one circle earns you 15% of your principal. Ideally, the principal for the next circle = the earnings from the previous circle + the original principal, compounding growth.

Reality is harsh: Once the arbitrage chain is made public or discovered by large players, the price difference shrinks instantly. As soon as the supply and demand balance is adjusted, the profit margin disappears.

How to Find Opportunities

Free Tools:

• CryptoRank's “Arbitrage” tag: directly view price differences across exchanges
• CoinMarketCap: Monitor the prices of all trading pairs and exchanges.
• DEXscreener: Track DEX liquidity pools and exchange rate differences

Paid Scanner:

• Coingapp, ArbitrageScanner, ArbiTool, etc.
• Automatically or semi-automatically discover arbitrage opportunities
• Some support for API automated trading (Risk: involves fund security, must DYOR before use)

Other Channels:

• TG channels, private communities, and Twitter influencers are selling arbitrage information.
• Issue: Information is often delayed or outdated, with varying quality.
• Paid courses and Alpha clubs are also quite common.

Suggestion: Instead of chasing venture capital information, it is better to learn to analyze the market yourself. This is long-term competitiveness.

How many accounts do I need to open?

It depends on the situation. Casual players might only need 2-3 major exchanges (Binance, Kraken, Bitstamp).

Professional arbitrageurs may need to manage dozens of accounts—CEX, DEX, P2P mixed—to seek out the maximum possible opportunities.

But the prerequisite is: first study the market to find real opportunities, then decide which platforms to go on. Blindly opening accounts only increases KYC difficulty and management costs.

Legal Issues

Arbitrage is legal in itself. But be aware:

• Need to pass KYC and meet the trading restrictions of each platform
• Do not use mixers (will be flagged as high risk)
• API trading depends on the platform policy (some do not allow it)
• When arbitraging in multiple countries, it is important to understand the local policies and restrictions of banks and exchanges.

Bottom line

Early years: Arbitrage is a gold mine for ordinary people.

Now: This land is occupied by professional legions and robots.

Is there still a chance? Yes. But it requires:

• Sharp information scent
• Solid on-chain analysis capabilities
• The patience to manage dozens of accounts
• Willingness to continuously research the market

Want to rely on Arbitrage for a stable monthly income? First, ask yourself if you have these qualities. Most people don't.

DYOR, good luck.