# Bitcoin Arbitrage Opportunities: A Short Guide

Last updated on January 2nd, 2018 at 12:00 am

Bitcoin arbitrage is the buying of bitcoins on an exchange where the price is very low and selling it at an exchange where the price is relatively higher. The prices of Bitcoin vary on various exchanges, due to the fact that the markets are not directly linked, and the trading volume, on many exchanges, is low enough that the price does not adjust to the average right away.

Here a great video by Andreas Antonopoulos about why these arbitrage opportunities even exist:

## A Simplified Example of a Bitcoin Arbitrage Opportunity

The price of Bitcoin on Coinbase is \$650 and the price of Bitcoin on BTC-E is \$636, the difference between the prices is \$14, and this is quite a decent opportunity for arbitraging. Lets say, you buy 100 bitcoins on BTC-E at the rate of \$636 each and subsequently, you sell them at Coinbase at the rate of \$650 each, you make \$14 per Bitcoin. Lets get down to the math

Number of Bitcoins bought in BTC-E = 100

Price of each Bitcoin                                    = \$636

Total price                                                       = \$636 * 100 = \$63,600

Number of Bitcoins sold in Coinbase      = 100

Price of each Bitcoin                                   = \$650

Total                                                                = \$650 * 100 = \$65,000

Total profit                                                     = \$65,000 – \$63,600= \$1,400

Thus, you can see that Bitcoin arbitrage seems like a wonderful opportunity to make some passive income, but there are a few barriers to it.

## Barriers to Bitcoin Arbitrage

1. The time it takes to verify each of the transactions (buying and selling) can add up and the exchange rate might change within that timeframe.
2. Many exchanges require a lot of verifications in order to trade a large number of Bitcoins.
3. Depositing fiat currency can be a time taking process (can take up to 10 days depending on your payment method).
4. Many exchanges have fees, which I have overlooked in the given example, that you should take into account.
5. Pay attention to the transaction volume on each exchange as you may end up not being able to sell all of the Bitcoin you bought at the cheaper exchange.
6. Price differences also reflect an exchange’s reputation. For example, BTC-E’s exchange rate is lower these days because less people are trusting the exchange to handle their money correctly. Less trust = less buyers = lower exchange rate. The same thing happened during the last days of Mt.Gox where the price was lower and lower because people didn’t trust the exchange to allow them to withdraw their money.

### A Detailed Bitcoin Arbitrage Calculator

So now let’s take the real live example (not a simplified one) and actually include all of the different fees that are involved in such an arbitrage. Those fees include:

• Fiat deposit fees
• Fiat withdrawal fees
• Bitcoin deposit fees
• Bitcoin withdrawal fees
• Transaction fees

I’ve taken the liberty to create some sort of calculator using Google spreadsheets just to show you how hard it can be to actually create a profit. Take a look below:

If you want to clone this calculator yourself feel free to download it at this link. All of this suggests that Bitcoin arbitrage is quite a difficult task. If you play around with the numbers a bit you’ll see that if the spread (difference between buy and sell values) grows a bit larger you start to become profitable. But in the current state we are actually losing money in the process.

However, if you look even further into the calculator’s data you’ll see that BTC-E takes up to 10 days to receive your deposit. In that time the spread can change. So the best tactic would be to keep some fiat currency in the exchange before hand and choose the right time to execute the arbitrage.

## Should I Try to Arbitrage Bitcoin?

If you have some extra BTC, or cash, then you’re welcome to try it yourself.  As long as you are careful, and set strict guidelines for when, and how, you will engage in this process.  Unlike speculation, margin trading, and other activities that can be viewed as market manipulation, and in some cases, may even be truly harmful to the market as a whole, arbitrage is a positive process.

Bitcoins should not cost varying amounts across each exchange, especially consider that all of the exchanges can be accessed from one’s computer.  Arbitrage simply brings the exchanges together to an average price.  As Bitcoin’s market grows, the gap between exchanges will narrow, as the rate at which people arbitrage increases.  The current volume can certainly help an individual make a significant amount of cash, but it is not yet worthwhile for large financial firms to engage in Bitcoin arbitrage directly.

Overall, Bitcoin arbitrage may be an opportunity to make some passive income but at the same time, it has risks. Moreover, almost all exchanges have an API and these can prove to be very prosperous for you. Utilizing these APIs will give you the tools you need to create a custom arbitrage bot, or hire someone to do it for you.  Still, even attempting to arbitrage manually can be very beneficial, as long as you watch closely, and make sure you are placing simultaneous trades.

My personal opinion is that if you want to make some real profit from arbitraging you have to become an arbitrage professional. You probably won’t be able to arbitrage successful on your first or second try. Like everything else it takes practice, patience and experience. If you’ve had any experience with Bitcoin arbitrage I’d love to hear it in the comment section below.

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71 Comments on "Bitcoin Arbitrage Opportunities: A Short Guide"

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Cedric
Cryptocurrencies arbitrage isn’t profitable anymore, unless you know how to program and trade with extremely low latency bots that can outperform the domestic bots working on the exchanges servers(certainly not the junk sold in the retail); and even then it requires a 24/7 monitoring of the activity and constant adjustements of strategies and updates by developers as it a highly competitive business in a perpetual race The manual cross arbitrage ship has already sailed months / years ago, as the market as grown increasingly competitive and aggressive I’d like also to emphasize that it is very easy to get badly… Read more »
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Active Member
Steven Hay

Hey Cedric,

Some wise words of caution, thanks.

Any kind of trading is risky but arbitrage is the least risky form of trading if performed correctly, so that price risk can be contained. Of course, there’s always exchange, bank, regulatory and technical risk but that is also true of true of regular trading.

There’s no way (I’m aware of) to make profit in finance without assuming some risk. One just has to be educated on what the risks are to be able to correctly balance them against the potential reward.

Guest
Cedric
Hi Steven, unfortunately, my observations ans statistics show that trading with bots within one tenth of second is the only way to arbitrage trade nowadays; there are very few arb opportunities left in the current market for old school manual traders, especially in as it is headed downward and that extreme volatility makes it even more risky everyday; You can still do cash out arb and make some money selling on certain exchanges, but this will involve the banking system and your bank will shut you down as soon as you make significant volume of money transfers; not worth it… Read more »
Guest
Active Member
Steven Hay
Hey Cedric, Dare accepted! Recently I’ve been managing 10% or higher on arb trades between exchanges, which are as legit as it gets within each country. Generally the best arb opportunities are between developed and developing countries. The exchanges in developing countries won’t be as liquid or polished… but this is not to say that they’re untrustworthy. I started a trader’s group dedicated to exploring exchange arbitrage. You sound like an experienced trader and I’d be delighted if you joined us. Here’s the Telegram invite link: https://t.me/joinchat/DuGxvRHC-mV-btHxOX4kDA I’d particularly like to continue the discussion regarding the risks of the banking… Read more »
Guest
Cedric
Hi Steven, i think arbitrage is an extremely competitive business that shouldn’t be discussed too extensively on forums for obvious reasons ;) i don’t get why people come on forums to expose their money making strategies since the more people doing it the less opportunities there will be 10% is indeed often achievable in triangulation from crypto to fiat, but again this involves using the banking system and banks and regulators aren’t found of these money moves. Taxes aren’t the problem but scrutinity from anti money laundering authorities and being shut down by your freaked out bank isn’t really desirable.… Read more »
Guest
Active Member
Steven Hay

Hey Cedric,

Well, the purpose of the group is to hook up people so they can cooperate across borders. Not everyone has access to banks in the right countries.

True enough about the risks. I haven’t had any problems from the banks so far but it can happen.

Sure, crypto-to-crypto has much lower margins. It’s easier and mostly done by bots nowadays.

You think the crypto market is headed down? But we’ve always had such crackdowns and scandals… That’s nothing new.

Guest
Cedric
arbitrage with south korea is now technically dead imo if this is what you mean by cross border arb. They have insanely strict regulations coming up for cryptos and laws that prohibits overseas transfers above 50k per year; but you probably already know that. If you consider the risk to have your funds seized by local authorities + the high risk of being scammed, the business doesn’t make sense anymore unless you can fetch a 50% – 30% return what i think doesn’t matter, but there is for sure something coming up this year in term of regulation and probably… Read more »
Guest
Active Member
Steven Hay

Yes, I am aware of the Korean crackdown. A lot of foreigners were signed up with Korean exchanges – I’m not sure why this was a problem to their govt. but they seem keen to stop it.

The risk of seizure varies by country. I believe Korea and India both have high premiums but both are indeed risky places for trading. However, there are more options on the table where the risk is not particularly high.

I’m not too bullish on the Euro, it’s a 100% centralized and massively pre-mined altcoin with infinite inflation and no public ledger!

Guest
Cedric
i have to respectfully disagree; Euro may be “centralized”, but who cares; at least it is backed by robust governments (Germany/France) and mean that it will at least always be worth something in my homeland. I use it everyday for my daily expenses and can use it in 20 neighboring countries Euro also has one of the lowest inflation rate in the world; lower than usd, whereas bitcoin has suffered a 35% inflation since january 1… Looking at the charts, bitcoin just look like the typical pump and dump scheme pattern; it is very likely headed back to where it… Read more »
Guest
Active Member
Steven Hay
Hey Cedric Well, inflation isn’t the same as a price increase. Inflation is the creation of more money, which dilutes the value of the entire monetary supply. Bitcoin’s supply is limited to 21 million, and it’s rate of inflation halves roughly every 4 years until reaching that maximum. Bitcoin is rare whereas Euros are not. Personally, I’m happy when my money is worth 35% more rather than seeing its value slowly erode of time. As for Bitcoin being a pump and dump, sure, such cycles do play out in crypto markets. Bitcoin has gone through 5 or 6 of them… Read more »
Guest
Jack

Hi Steven,

Do you still manage to get 10% on arb trades?

I am interested in multi-stage crypto arbitrage and would be keen to chat to you a little about it, please.

If you can spare the time, please contact me.
Thanks

Member
Active Member
Steven Hay
Hi Jack, Now and then, I do, yes. I got your email about multi-stage crypto arbitrage but I highly doubt you’ll be able to get as much as 10% that way. You see, the problem is that when a country has a 10% premium on Bitcoin over the int’l “standard” price – which is usually the USD price – then it’s very likely due to the fundamental costs of doing any kind of business in that country. As such, the premium is very likely to apply to *all* cryptos in that country. This makes it hard to, as your example… Read more »
Guest
Gelly

I agree Ive done it only 6 times acting on alerts from Arbiswap buying on one exchange and selling on another but I’ve made about 10k doing this was easiest money ever made. Arbitrage opportunities do exist just a matter of sorting out the good ones from the bad ones which can be tricky. Thats why the bigger the gap the more likely to profit.

Guest
Ranson

Hi, I would like to know what is the rough percentage of difference between both platform in order to profit from arbitrage. Also, what are the costs will be incur like fiat deposit fees, transaction fees, withdrawal fees and so on.

Guest
Active Member
Steven Hay
Hey Ranson, Well, this is very hard to answer as it depends on what type of arbitrage you’re doing (crypto-only exchange to crypto-only exchange? or crypto-fiat exchange to crypto-fiat exchange? or a mix?). It will also depend on the price differences between the exchanges, the cost of crypto transfer (dependent on the particular network’s fees) and / or the cost of fiat transfer… Of course, the exchange fees also count… There are a lot of variables here. Using bots, it’s possible to arbitrage between even very small (sub 1%) price differences between exchanges. If moving fiat around then, depending on… Read more »
Guest
Rickson

Hi Steven, Im a (noob) from india and the sell price of bitcoin as of today in india across unocoin.com is Rs 769426 which is 769426/63.63= 12092\$. The average buy price across elsewhere(say US) is 11343. If i buy from elsewhere(US) at 11343 and transfer to my unocoin wallet and sell at current price, then i will get 749 minus the bank charges at deposit in US and withdraw in India. Sounds so sweet to believe. What are the shortcomings in this strategy??

Guest
tictak

sounds good. but while buying in USD or other currencies you will have to pay markup fee of 3.5% +18% GST which will be close to 4.15 and then there is conversion fees. Also you will only be able to buy from credit or debit card, then websites like cex.io will charge further commission. Then there will be fee etc
Eventually you will break even. Do calculations again with above points

Guest
Active Member
Steven Hay

Hey Rickson,

That is correct, yes. The shortcoming is the difficulty of repeating this strategy, as it’s usually quite expensive to move fiat money between countries. It also takes time to move, so if Bitcoin price increases a lot while it’s in transit, you will lose the profit you could have made by holding BTC. If you have a reliable way of doing this, it’s fairly easy money – although see elsewhere on this page for warnings about the risks by Cedric.

Guest
Ron

Hi, I have a question. If you do arbitrage between two exchange offices in the first one you buy, and the second you sell and cash out, isnt there going to be a problem or something at the second exchange office, that you only cash out at their site, but dont trade?

Thanks,
Ron

Guest
mar

I thought about that too. It seems too suspicious that somebody is just cashing out without putting money. But then, I realized that you increase the trade volume of the exchange since you added bitcoin from somewhere else. It’s not that it’s just the exchange’s money your cashing out. Somebody in the exchange who deposited money in the exchange is just buying your bitcoin at the “market price” of the exchange.

Guest
Active Member
Steven Hay

Hi Ron,

No, there shouldn’t be any problem with that. Selling is trading, and buying is also trading. Exchanges are happy to cater to people who take both sides or only one side of a trade. You have nothing to worry about by doing this; you’re accurately providing a service to the exchange and its clients by lowering the buying price for buyers.

Guest
TalesFromTheCrypto
I saw the volume of BTX rise dramatically today and the price was still unaffected. I knew a surge in price would follow the volume increase. BTX started around 14.50 when i noticed the volume +. Some exchanges had 14.16 while others were mostly aound 14.50-15.10. I tried to buy into BTX but couldnt figure out how to pay with fiat :( Right now BTX is at 18.01 but is still fluctuating on the exchanges from 16.79 up to 18.06 and the volume is still increasing. I wish i could figure out how to get 250 fiat into the market… Read more »
Guest
Ronen Cypis

Nice read, Thanks!

Guest
Ron

There are great arbitrage opportunities here in India, on many alt-coins as well as on Bitcoin. For example, price of 1 bitcoin in USD based exchanges (gdax/bittrex) is 9700 where as here it is already 10600+ USD. Arbitrators, hello? :)

Guest
Crytonator

Have you tried buying from foreign exchange and selling through an Indian exchange?

Guest
Dev Haldar

Have you tried it?

Guest
jafer

Did you find any method to buy at international exchanges with indian payment methods like banks ? I guess credit and debit cards are charged around 3-4% on these exchanges.
Indian exchanges always charge around 15% more here than international price. Also there are some asian markets awhere BTC is sold 800-10004 more than international price.

Guest
Active Member
Steven Hay

Yes, there’s always a reason why arbitrage exists, especially at such wide differences. Usually it’s caused by the difficulty, risk and expense of traditional money transfers.

Guest
Chris Carter

You still in india?

Guest
Uni

The same in South Korea. Usually 7% up compared to other big 5 . It’s good chance fir arbitrage. I want to get an automatic arbitrage robot. Anyone to recommend?

Guest
Active Member
Steven Hay

Hi Uni,

I don’t know of any specific bots which support South Korean market. However, as the code for most bots is open source – and you should only ever use open source code for something like this – then any exchange with an API can be added.

I recommend that you modify existing bot software – perhaps the Gekko bot – to support a Korean exchange. You should be very sure that you understand exactly what the code is doing before entrusting it with large sums of money.

There have been incidents of crypto trading bots which stole money.

Guest
Darren

does anyone know of a good arb fund that you can invest in?

Guest
Active Member
Steven Hay

Hey Darren,

Nothing official but I was doing Bitcoin arbitrage trading for a while… We might be able to work something out.

Guest
Álvaro

Hi Steven

I would be interested in knowing a bit more, I am trying to study deeply the topic and I could learn faster from your experience (if is OK for you), let me know how can I contact with you.

Cheers!

Guest
Active Member
Steven Hay

Hey Alvaro,

Sure, you can reach me at [email protected]

Guest
Ken
Hey Steven, I like your comments here. A question you might be able to shed light on. Once you have done the arbitrage (you can transfer the BTC etc. from exchange to exchange by wallet – so in less than an hour), how do you get the money back to the first exchange? Say exchange 1 always have a lower BTC price than exchange 2, you want to buy BTC at exchange 1, transfer the BTC from exchange 1 to exchange 2 by wallet and then sell at exchange 2. But now you have cash at exchange 2. How do… Read more »
Guest
Tshedi

Good day,
I am still waiting for an answer to this question and I do not seem to get it. Does anyone have an answer to this because I would sincerely appreciate it?

Guest
cosmas

Use Tethers or other stable coins!

Guest
Active Member
Steven Hay

Hi Ken,

Apologies for only responding to you now. Somehow your comment was missed, possibly due to the high volume of comments around that time.

The simple way to do this is via the banks or perhaps a payment service. You could in theory also physically take the money there or perhaps send it in the form of goods.

The reason why the premium exists is primarily due to the difficulty of circulating the funds. The banks, central banks, govt. rules and expensive middlemen are exactly why arbitrage hasn’t – and probably never will – smooth out crypto price differences between countries.

Guest
Jordan

I would like someone to work with in this space. Let’s discuss

Guest
Ron H

Check out dev_sml.magellancapital.com for arbitrage opportunities by coin

Guest
Darmody

Hi,

I am curious about the legal restrictions on transferring BTC from foreign exchanges to sell them on US exchange? Any input on money transfer/foreign exchange rules from the point of US laws?

Thanks.

Admin
Member
Zsofia Elek

Hi Darmody, it is probably the best to consult on this topic with a local lawyer who is familiar with digital assets as the regulation and rules are even different between the US states about how they handle cryptocurrency and money transfers.

Guest
jonathan

Hi Everyone!
Great article.
Heaps of information, thank you for sharing!

couple of questions regarding getting onto an exchange
there are so many exchanges to trade on just for 1 location, it does create a frustrating choice

how do i spot the good exchanges?
what are common limitations in exchanges (i am aware that not all exchanges allow short positions?)
what kind of exchanges will generally have the arbitrage opportunities? Low volume vs High volume?
what exchanges should i stay away from, bad reputation

Cheers,
Jonathan

Admin
Member
Zsofia Elek

Hi Jonathan, thanks for the feedback. We have an article where we have gathered several exchanges which also includes reviews about their services. You can read it here: https://99bitcoins.com/best-bitcoin-exchanges-comparison-review/

Guest
Peter

Hi ZSofia,

We are testing a new service and wanted to get your thoughts to see if it will be helpful and has value for those who do cross-market crypto trading. It helps to find best arbitrage deals across different crypto exchanges.

Let me know what you guys think? We are considering to turn it into a full-scale project, but firstly we wanted to get your opinions and possibly test results to see if you guys could profit from it. Please provide your comments and suggestions. We are really looking forward to get your feedback! Thank you!

Best Regards,
Peter

Admin
Member
Zsofia Elek

Hi Peter, this sounds very interesting however at the moment I am afraid we are not able to test your site as we don’t do on demand reviews and also we are pretty busy nowadays with internal content. Please note, I had to remove the link from your comment as that is not allowed in the commenting rules.

Guest
Jack

I’m keen to test it! Contact me and let me know.