Due to the rapid rate at which crypto prices normalize after an arbitrage trading opportunity is found on an exchange, arbitrage traders do find it very difficult to complete the transfers needed to complete their trades.
Knowing this, we have decided to walk you through 3 different ways to do crypto arbitrage without transferring any funds.
When you do crypto arbitrage without transferring any funds, you will have a higher profit margin because you will not care about any transfer fees.
So without wasting much time, let’s get started.
What is Crypto Arbitrage Trading?
Crypto arbitrage trading is the process of buying a crypto asset on an exchange and immediately selling it at a higher price on the same exchange or another one. What causes crypto arbitrage opportunities is discrepancy in the pricing of cryptocurrency assets on an exchange or across different exchanges.
Because this post is meant to show you ways to do crypto arbitrage without transferring, I am not going to dig deeper into what crypto arbitrage is. You can check our full guide on that if you are interested in learning more.
3 Ways to Do Crypto Arbitrage Without Transferring.
Having known that the major losses in arbitrage trading are from transfer fees, the best way to escape these losses is to do your crypto arbitrage without transferring.
Crypto arbitrage opportunities are flexible enough for you to apply different techniques in order to leverage them.
Here are three methods to do crypto arbitrage without transferring:
1) Using P2p Arbitrage Method:
Unlike the normal exchange arbitrage where you have to buy a coin on one exchange and transfer it to another exchange before selling it, P2P arbitrage does not involve any crypto transfer. In p2p arbitrage, the only thing you need to do is look for a price spread on the p2p market, then buy from users selling low and sell to users buying high.
There are many ways that p2p arbitrage can be implemented. We have intra p2p arbitrage, between exchange p2p arbitrage and others. To learn more about p2p arbitrage, check out our guide on that here.
2) Using Triangular arbitrage Method.
Triangular arbitrage is another good way to do crypto arbitrage without transferring.
Sometimes, some of the cryptocurrency assets are either overvalued or undervalued, and what a triangular arbitrageur does is take advantage of this discrepancy by exchanging the undervalued coin against another coin for a profit.
Here is how triangular arbitrage works:
Let’s say I noticed an undervalued coin between Solana coin, USDC, and Cardona coins on the Binance exchange. I can profit by using my USDC to buy Solana coins, then using the Solana to buy Cardona, and then selling the Cardona back to USDC.
At the end, the amount of USDC I have must be greater than what I had at the start for such a trade to be termed profitable.
To learn more about triangular arbitrage trading, check out our guide here.
3) Using Crypto Arbitrage Bots.
Although triangular arbitrage trading can be implemented manually, it is very difficult to spot opportunities, and when spotted, it usually doesn’t take a long time for this discrepancy in the price of crypto assets to normalize. For this reason, many programmers have developed crypto arbitrage bots that can help spot this kind of arbitrage opportunity and trade it.
These arbitrage bots use some algorithm to spot when there is an undervalued or overvalued coin on an exchange and trade it immediately.
To use this method, all you need to do is look for an arbitrage bot that supports the exchange you are using and sign up with them. To make a better profit using a crypto arbitrage bot, you must be able to configure it to trade efficiently.
There are a lot of arbitrage bots out there right now, and each one supports a different crypto exchange. Bitsgap, Pionex, Cryptohopper, 3commas, Trality, and others are among them. Some of these arbitrage bots are free, while others demand a monthly subscription. Please note that only Pionex, Trality, and Bitsgap support the Binance exchange among the bots listed above.
To learn more about the crypto arbitrage bot, you can check out this guide.
Concluding Thoughts
Although doing crypto arbitrage without transferring reduces the losses due to transfer fees, there are some other losses due to slippage and exchange fees (when triangular arbitrage) and subscription fees (when using crypto arbitrage bots). These losses, if not watched, can cut into the profit of any arbitrage by any trader.
However, these losses are minimal compared to normal crypto trading. In normal crypto trading, you are signing up for a contract for difference, which when lost will result in both trading fees losses and price depreciation.
Disclaimer:
As always, the information on this page is based on our experience and the research we have done. You can refer to our disclaimer page to know how you should treat information on this website.