What is Arbitrage in Crypto Trading?

Arbitrage represents a trading strategy embraced by traders aiming to capitalize on varying prices of identical digital assets across distinct exchanges. For instance, an arbitrage trader purchases Bitcoin at a lower cost on exchange A and subsequently sells the same Bitcoin at a higher value on exchange B.

Divergences in exchange prices are often influenced by factors like liquidity and competitive offerings. Traders naturally prefer platforms with more favorable prices. The arbitrage trader leverages this situation to generate profits.

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