Cross-Exchange Arbitrage in Crypto: The Complete 2025 Guide
This practical guide shows how to capture price differences across crypto exchanges using spot and derivatives markets. You’ll learn spread math, inventory routing, risk controls, automation ideas, and how to avoid common pitfalls.
Open multiple venues to access spreads
Arbitrage depends on speed and venue coverage. Create accounts on several liquid exchanges to compare quotes and execute legs simultaneously:
Tip: Start with small inventory on each venue. Once your workflow is stable, scale capital gradually.
What Is Cross-Exchange Arbitrage?
Cross-exchange arbitrage is the practice of buying a crypto asset where it’s cheaper and simultaneously selling it on another exchange where it’s more expensive. The goal is to lock in the spread (price difference) after accounting for fees, transfer time, and slippage. Unlike directional trading, arbitrage aims to be market-neutral.
The Main Arbitrage Types You’ll See
1) Spot–Spot (Instant or Inventory-Based)
Buy on Exchange A and sell on Exchange B at the same time. The fastest version uses pre-positioned inventory on both venues to avoid blockchain transfer delays.
2) Spot–Perpetual (Funding Arbitrage)
Buy spot on one venue and short the perp where the price trades at a premium. You earn the spread via convergence and potentially funding if it’s positive to shorts.
3) Cross-Venue Basis Trade
Long spot on Venue A, short dated futures or perps on Venue B to capture basis differences, then unwind when basis normalizes.
4) Transfer (Latency) Arbitrage
Move coins from the expensive venue to the cheap one after closing a trade. Works when spreads persist long enough to cover transfer times and fees.
Create your venue set
For robust coverage, combine at least two of the following liquidity hubs: BYBIT, BITGET, and MEXC.
Step-by-Step Setup
- Accounts & KYC: Open and verify accounts on 2–4 venues (e.g., BYBIT, BITGET, MEXC).
- Security hardening: Unique emails, strong passwords, hardware 2FA, withdrawal allowlists, API keys with IP restrictions and no withdrawal permissions for trading keys.
- Fund venues: Split inventory across exchanges using stablecoins on cheap, fast networks (e.g., USDT on TRON or USDC on Arbitrum—evaluate fees & reliability). Keep a buffer for fees.
- Market selection: Focus on highly liquid pairs (BTC, ETH, top alts). Thin books increase slippage risk.
- Tools: Use a multi-venue price dashboard or build a simple script to poll order books and compute net spreads (see formula below).
- Execution: Place both legs nearly simultaneously. Prefer limit orders at/within the spread or IOC/marketable limits. Avoid pure market orders in thin books.
- Rebalancing: Periodically transfer assets to restore target inventory per venue. Consider in-exchange conversions to minimize chain fees.
- Records: Export fills, fees, and funding logs for P&L and taxes. Automate daily exports where possible.
Spread Math & Profitability
At its core, you’re checking whether the cross-venue price difference exceeds all costs plus a safety margin.
GrossSpread = SellPrice_B - BuyPrice_A
AllFees = TakerFee_A + TakerFee_B + Funding +/- Rebates + TransferCosts
NetEdge = GrossSpread - AllFees - SlippageBuffer
ROI (per cycle) = NetEdge / BuyPrice_A
Example (spot–spot, USDT pair):
| Component | Value |
|---|---|
| Bid on Exchange B | 27,010 |
| Ask on Exchange A | 27,000 |
| Gross spread | 10 |
| Fees (0.06% each side) | ~32.4 |
| Slippage buffer | 5 |
| Net edge | -27.4 (no trade) |
Conclusion: With taker/taker, this spread is not tradable. You’d need a larger spread, maker rebates, or partial maker fills to flip positive.
Fees, Limits & Hidden Costs
- Taker vs. Maker: Taker fees can erase small spreads. Incorporate maker orders or rebates where possible.
- Funding: For perp legs, funding can help or hurt depending on direction and timing intervals.
- Withdrawal fees & limits: Chain fees, venue withdrawal limits, and maintenance windows can stall transfers.
- Price impact: Executing size into thin books widens the true cost beyond quoted spreads.
- Conversion costs: Stablecoin swaps (USDT↔USDC) may carry extra spread/fee.
Key Risks & How to Manage Them
Execution risk
One leg fills and the other doesn’t. Use IOC/Fill-or-Kill where available, or trade smaller size with tighter limits.
Latency & transfer risk
Blockchain congestion or venue downtime traps inventory. Prefer pre-funded, inventory-based arbitrage; choose fast networks and keep emergency buffers.
Liquidity & slippage
Thin order books move quickly. Stick to deep pairs and avoid news spikes unless spreads are exceptional.
Counterparty risk
Diversify across reputable venues, monitor status pages, and withdraw excess profits regularly.
Legal/tax
Regulations vary by country. Keep detailed logs and consult a qualified professional. This article is for educational purposes only.
Ready to test with small size?
Set up two or more accounts so you can quote both sides quickly:
Automation & API Workflow
- Data ingest: Poll top-of-book quotes & available size from each venue’s REST/WebSocket.
- Signal: Compute NetEdge per pair and size tier; require margin-of-safety thresholds.
- Execution: Submit dual-leg orders (maker/taker mix). Use order tags to link legs for monitoring.
- Risk engine: Per-venue exposure caps, kill-switches, and stale-quote guards.
- Rebalancer: Periodically normalize inventories; prefer internal conversions over on-chain transfers.
- Monitoring: Dashboards for P&L, fill ratios, funding paid/received, and venue health.
Pre-Trade Checklist
- Spreads > (all-in costs + safety margin)?
- Inventory available on both venues?
- Order types supported (IOC/FOK, post-only)?
- Withdrawal allowlist & API restrictions set?
- Funding windows noted (for perps)?
- Emergency stop/kill-switch ready?
Open accounts & build your spread board
Compare quotes in real time and route the best legs between BYBIT, BITGET, and MEXC.
FAQ
Is cross-exchange arbitrage still profitable in 2025?
Yes, but profits are uneven. Spreads compress during calm periods and expand during volatility or venue-specific dislocations. Execution quality and fee structure largely determine success.
How much capital do I need?
You can start small (a few hundred to a few thousand USD) to test workflows. Scaling requires more capital and careful risk controls to avoid moving the market.
Do I need bots?
Bots help with speed and consistency, but manual trading can work for larger, slower-moving spreads—especially with pre-positioned inventory.
Which pairs are best?
BTC and ETH usually have the deepest liquidity. Some mid-cap alts can show bigger spreads but carry higher slippage and transfer risks.
How do I avoid transfer delays?
Favor inventory-based arbitrage (fund each venue), use faster networks, and keep buffers for fees. Only transfer when spreads justify it.
Is this risk-free?
No. Execution failures, venue outages, funding swings, and regulatory/tax issues can turn a theoretical edge into a loss. Treat this as a professional, process-driven strategy.
