Low-risk way to generate income: how to profit from crypto asset price gaps

Cryptocurrency markets offer many ways to earn, but most of them require in-depth analysis and carry significant risks. However, there is a strategy that allows earning with minimal risks — this is arbitrage crypto or crypto arbitrage. Unlike price speculation, arbitrage works with existing price gaps between different platforms and markets. Let’s understand how it works and why it is attractive to traders.

Why is crypto arbitrage considered a low-risk strategy?

The main advantage of crypto arbitrage is that it eliminates the need to predict future price movements. You don’t need to perform technical analysis, study fundamental indicators, or guess market sentiment. Instead, you simply capitalize on existing price differences between two or more platforms.

Since all necessary data is already available on the market, the risk is significantly lower than traditional trading. The transaction takes just a few minutes, not days or weeks. There’s no time for the market to turn against you.

The main principle: how does arbitrage crypto work?

Crypto arbitrage — is buying the same asset at a low price on one platform and selling it at a higher price on another. Such gaps occur due to differences in demand and supply, delays in data transmission between exchanges, as well as regional market peculiarities.

Here’s a simple example: if Bitcoin (BTC) is trading at $87,31K on one exchange, and at $87,15K on another — you can buy on the second and simultaneously sell on the first, earning the difference (minus fees).

Current cryptocurrency data:

• Bitcoin (BTC): $87.31K (24h change: -1.08%)
• Ethereum (ETH): $2.92K

Main types of crypto arbitrage

1. Cross-platform arbitrage

This is the most common type. You trade simultaneously on multiple platforms, exploiting price differences.

Standard method: Buy an asset on a platform with a low price, sell on a platform with a high price. For example, if BTC costs $21 500 on one exchange and $21 000 on another, you earn $500 per coin (minus fees).

Regional approach: Prices for the same assets can vary significantly across countries. South Korean and Japanese exchanges often show substantial premiums on popular coins. For example, Curve (CRV) in July 2023 traded with a premium of up to 600% on regional exchanges compared to the global level.

Decentralized arbitrage: On decentralized exchanges (DEX), automated market makers (AMM) set prices differently than centralized exchanges. This creates even more arbitrage opportunities.

2. Inside one platform arbitrage

Here, you work with different products within the same exchange.

Funding fee: On futures markets, traders pay each other fees depending on their positions. If the funding rate is positive, those with long positions pay those with short positions. You can open both spot and futures positions simultaneously and profit from these payments.

P2P trading: On P2P platforms, merchants set their own prices. You can place buy and sell ads with a markup, earning on the price difference.

3. Triangular arbitrage

This is a more complex method involving three cryptocurrencies. For example:

• Buy Bitcoin with USDT
• Exchange Bitcoin for Ethereum
• Sell Ethereum for USDT

If prices are misaligned, you will profit on each exchange. This method requires speed, so specialized bots are usually used.

4. Options arbitrage

Here, you trade not the asset itself, but options to buy or sell it. Often, actual volatility differs from what the options market implies. This creates an opportunity to profit from the difference.

Main advantages

Quick income: Money is earned in minutes, not weeks.

Many opportunities: New assets and platforms constantly appear on the market. As of 2024, there are over 750 crypto exchanges worldwide, each with its own prices.

Young market: The cryptocurrency market is still developing, so inefficiencies occur more frequently.

Volatility works in your favor: When prices change rapidly, price gaps become larger.

Challenges and risks

Commissions eat into profits: Trading fees, withdrawal fees, network fees — all reduce your net profit. If you trade on small differences, fees can wipe out your earnings.

Narrow margins: Price gaps are often small. To make a reasonable profit, significant capital is needed.

Bots are necessary: Manual trading is too slow. By the time you notice an opportunity and execute a trade, the gap may disappear. Automated bots catch arbitrage opportunities instantly.

Withdrawal limits: Many exchanges have daily withdrawal limits, which can prevent you from taking out your profits.

How to automate arbitrage?

Most serious arbitrageurs use trading bots. These algorithms:

• Scan multiple platforms simultaneously
• Detect price gaps in milliseconds
• Execute trades automatically
• Send notifications about new opportunities

Simple bots can be set up by yourself if you have basic programming knowledge.

Where to start?

1. Choose platforms: Open accounts on several major exchanges.

2. Start monitoring: Begin tracking price gaps between platforms manually or with a bot.

3. Calculate profitability: Before each trade, determine if it will be profitable after all fees.

4. Work with reliable counterparties: Use platforms with good reputation and security.

5. Start small: Don’t invest all your capital at once. Test the strategy with small amounts.

Conclusion

Arbitrage crypto offers a way to earn on the cryptocurrency market without predicting its movements. It is a low-risk strategy, but it requires large volumes of capital, fast execution, and careful fee calculations. Serious earnings almost always require automation.

Remember: crypto arbitrage works not because you predict the market better than others, but because you catch existing price gaps. This makes it one of the most reliable strategies in the volatile cryptocurrency market.