Just like other markets, cryptocurrency markets have competitions that lead to differences in price on various exchanges. In short, arbitrage traders rely on price discrepancies to make profits by buying on one exchange and selling on another.
This article is your ultimate guide if you want to learn about arbitrage crypto bots and how they work.
What Is Arbitrage in Crypto?
Crypto arbitrage is a strategy that involves buying a digital asset and selling it across multiple exchanges. Arbitrage involves minimal risks because you only take advantage of the inefficiencies in the marketplace to earn profits.
Arbitrage traders identify exchanges where certain coins are selling low, buy them, and then sell them at exchanges at higher prices. Prices fluctuate very fast, and you need to effect these buy and sell orders almost simultaneously.
Is It Possible to Automate Arbitrage Strategies?
Yes, automating arbitrage strategies is possible. Imagine spending hours on end monitoring the crypto marketplace so that you identify opportunities for profit-making. It would be tedious, right? People use trading bots because they are fast and efficient, and they don’t make decisions based on emotions like humans.
Luckily, there are many arbitrage bots that will help you find opportunities to buy and sell 24/7. Arbitrage crypto bots work by sending crypto coins from one exchange to another.
Do Arbitrage Bots Work on Crypto?
Arbitrage bots work better on crypto than on other financial markets such as stocks. The first reason is that the crypto market is decentralized. No authority governs what prices different coins should trade at. Arbitrage traders can thus exploit the price differences to make gains.
The second reason arbitrage bots work on crypto is that the crypto market is highly volatile. Coins change value very fast. Arbitrage traders minimize their risks for losses by taking advantage of market inefficiencies.
Finally, so many emerging DeFi ecosystems offer arbitrage traders opportunities to explore different liquidity pools, where there are more chances for price discrepancies.
Is Crypto Arbitrage Profitable?
Crypto arbitrage is profitable but comes with some risks, such as high transaction costs. Investors looking to exploit arbitrage strategies should know the transaction fees on different exchanges, which may affect the total profits.
For instance, if you buy bitcoin worth $20,000 on exchange A and sell at $25,000 on exchange B, you will make a $5,000 profit, minus the deductions. To make significant profits with arbitrage trading, you must also invest a considerable amount.
How Much Does Arbitrage Bot Cost?
The price of arbitrage bots varies depending on the providers. There are paid and free bots that traders can use. Here are some of the most common arbitrage bots and their cost.
Cryptohopper, one of the market’s top arbitrage bots, offers traders a free basic plan with access to about 20 positions per month. Advanced traders can pay for the Explorer package at $16.58 monthly, the Adventurer plan at $41.58, or the Hero plan at $83.25 monthly.
Bitsgap is another arbitrage crypto bot that is perfect for all levels of users, which is confirmed by this Scammerwatch Bitsgap review which praises its accessibility. The bot gives you the ability to analyze more than 10,000 coin pairs. The cost of Bitsgap is $29 monthly. When you create an account, you even get a 7-day free trial which will help you determine whether the bot meets your needs.
Pionex is another crypto exchange that also has an in-built arbitrage bot. The bot analyzes the prices of coins on Huobi Global and Binance — some of the biggest exchanges globally. The Pionex bot is free and perfect for beginners and advanced traders.
Trality arbitrage bot allows you to trade on exchanges such as FTX, Coinbase Pro, Bitpanda, Kraken, Binance and many others. The Trality bot is free to use and is ideal for advanced investors. The bot gives you the ability to create your algorithms using the Rule Builder feature so that you’re in complete control of your investment.
HaasOnline is another arbitrage bot that helps you create rules with a click of a button. Trade on over 37 exchanges while exploiting price differences in order to profit using HaasOnline. These exchanges include Binance.US, BitMEX, Bitpanda Pro, Bitfinex, and Binance. A beginner plan goes for BTC 0.013, a simple one for BTC 0.023, and an advanced one for BTC 0.038.
Arbitrage crypto bots utilize market inefficiencies to find price differences in the crypto market. Arbitrage bots make work easier because they can quickly identify favorable positions for profit-making. Bots are necessary for arbitrage strategies, but you need to have enough capital to make the profit gains economically viable. Some bots are free to use, while others are paid. Choose one that meets your needs and trade like a pro.
About the Author
Certified blockchain and front-end developer, contributor at www.scammerwatch.com