Apart from the normal crypto arbitrage trading, Binance p2p arbitrage is another great opportunity for savvy traders to make some low-risk profit.
Binance, being the biggest exchange by volume, has a huge number of users and most of them are adopting the p2p trading method as it is at a zero fee.
Unlike in exchange arbitrage, where you have to pay some fee when transferring your crypto from one exchange to another, Binance p2p arbitrage does not involve much fees as the buying and selling of crypto is only within the Binance exchange. The only fee usually incurred on this trade is that charged by your payment method.
In this post, I will be introducing you to Binance p2p arbitrage, how you can make money with it, and what associated risks exist.
So without wasting much time, let’s get started.
Table of Contents
What is p2p arbitrage trading?
P2P arbitrage trading is the process of buying a cryptocurrency asset from a seller on a p2p market at a lower price and immediately selling it at a higher price on the same p2p market.
Arbitrage trading is just like normal cryptocurrency trading, where the goal is either to “buy low and sell high” or “sell high and buy low”. The only difference is that instead of doing this as a contract for a difference in price, it is done rapidly for discrepancies in the price of different crypto assets.
Eligibility for Binance p2p Arbitrage Trading.
Before you can leverage the Binance p2p arbitrage opportunities, you must meet the following requirements:
- You must have crypto capital.
- You must be a verified Binance user.
- You must enable SMS authentication.
- Other exchange account is necessary.
- You must have a supported payment method in Binance’s p2p market.
Reasons for Binance p2p Arbitrage Opportunity:
There are many reasons why there is some difference in the price of crypto assets on the Binance p2p market. Popular ones are:
- High price spread.
- Differences in the liquidity of a particular coin on different exchanges.
- The spot price and the p2p market price are not the same.
- Difference in crypto-to-fiat exchange rates.
Binance P2P Arbitrage Techniques:
The Binance p2p market is flexible enough for any savvy trader to adopt different techniques in p2p arbitrage trading. On just one p2p market, you’ll find price differences in crypto, fiat currencies, and global payment methods.
Here are three techniques you can use to take advantage of Binance p2p arbitrage opportunities.
Intra-p2p Market Techniques:
In this technique, p2p arbitrage trading is implemented only on the Binance p2p market. A closer look at the p2p market when filtered by local currencies or payment methods will reveal that there is a price spread in one crypto asset.
So, what you will need to do is to look for the highest spread, then buy from the user selling low and sell to the user buying high.
As the p2p transactions are free on the Binance exchange, the only consideration you need to make before knowing the profit is to subtract the fees charged by your payment method.
To have an edge with this technique, you must have a payment method in a different fiat. This will help you with higher trading opportunities and even cross trade between fiat currencies.
One cool thing about this technique is that it will save you the risk of transfer times and extra costs.
Between Spot and p2p Market Techniques.
Another technique in Binance p2p arbitrage is buying on the Binance spot market and selling on the Binance p2p market or vice versa.
A very close look at the spot market price and the p2p market price will reveal that there is a price difference on one crypto asset, so to adopt this technique. You need to look at the highest spread, then either buy from the spot market and sell at the p2p market, or vice versa.
So, what you will need to do is to look for the crypto with the highest spread across the spot and p2p markets, then buy from the lower priced market and sell at the higher priced market.
As we know, internal transfer (transferring from spot wallet to p2p wallet or vice versa) on Binance is at a zero fee, so the only charges to look at in these trading techniques are deposit charges on the spot market or the payment method charges on the p2p market.
Between Exchange Techniques.
The last technique in p2p arbitrage trading is “between exchange” trading techniques. Every exchange has its own p2p market, and a close observation of one asset will reveal that there is a price difference between one p2p market and another.
So what you will do is to find the higher price spread across these exchanges and buy from the one offering a low p2p price and sell on the other with a higher p2p price.
Although the Binance exchange offers a free p2p transaction, it is contrary to what is found on other exchanges. Just be aware of that.
Also, there are some transfer fees when sending your crypto from one exchange to another. Make sure you take that into consideration while checking the profitability of your trade.
Related: Bybit P2P Arbitrage Trading Guide
How to start Binance p2p arbitrage trading.
Now that you have understood what p2p arbitrage is and the techniques you can use to leverage it, let me now give you some steps to start Binance p2p arbitrage trading.
Step 1: Fund your Binance P2P wallet.
If you looking to sell your crypto asset at a higher price and buy back at a lower price on the Binance p2p market, the the first thing you need to do is transfer your crypto to your Binance p2p wallet.
If you have your cryptocurrency wallet on trustwallet, other exchanges, or Binance spot wallet, you need to transfer those coins to your Binance p2p wallet.
Please note that it is not all crypto asset that is supported on the p2p market, just make sure transfer the supported ones.
Here is a video on how to transfers crypto from Binance spot wallet to p2p wallet:
Step 2: Look for price spread.
Once you have funded your p2p wallet, the next thing you need to do is to look for a Binance p2p arbitrage opportunity.
Filter the market by your payment methods and local currencies and look for a high spread in the market.
Make sure you consider payment charges as a factor in the profitability of such a trade.
Step 3: Trade the Spread.
Once you have spotted a coin with a high spread on the Binance p2p market, then buy from users selling low and sell back to users buying high. At first, it is advisable that you do this with low capital, but when you master it, you can invest higher capital to increase the market profitability.
Risk involved in Binance P2p Arbitrage Trading:
- Price slippage.
- Limited asset on P2p market.
- Crypto prices can move too fast.
- High fees
- Security of Funds
When compared to other strategies of trading, P2P arbitrage trading is considered a low-risk endeavor.
For instance, unlike in normal arbitrage trading, Binance p2p arbitrage trading is considered to be more profitable. This is because there is no transaction between exchanges. The only fee incurred on this trade is that charged by your payment method.
However, the risk involved in this type of trading strategy should never be underestimated. These risks, when neglected, can cut into the capital of any trader, and you don’t want to be a victim of that.
Losses due to slippage and payment method charges should be monitored in order to record a more profitable trade.
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.