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How Does Crypto Arbitrage Work? Firstly, what is Crypto Arbitrage? Crypto arbitrage is a strategy to profit from a cryptocurrency's difference in price in two or more markets or exchanges. The only significant difference between crypto arbitrage and traditional arbitrage is the type of asset being traded. However, there are also several challenges and risks associated with crypto arbitrage. One of the biggest challenges is the crypto markets' fast-paced and highly volatile nature, which can result in rapid price changes. Moreover, there is also a risk of market manipulation, which can result in fake price differences that disappear as soon as a trade is executed. Furthermore, some exchanges may have stricter regulations or block accounts for engaging in arbitrage, which could result in significant financial losses. How does crypto arbitrage work? Arbitrage trading in crypto works the same as in traditional markets, and traders must quickly buy and sell an asset across platforms whenever they notice a price inefficiency. The only difference is that cryptocurrency arbitrage traders focus on crypto assets like Bitcoin or Ethereum. Another distinction between traditional and crypto exchange arbitrage is that the latter can target centralized exchanges (CEXs) and decentralized exchanges (DEXs). Arbitrage traders can only access CEXs with institutional market makers in conventional markets. DEXs are an innovation in the field of DeFi (decentralized finance). Instead of relying on centralized market makers, these blockchain-based exchanges use a technology called "liquidity pools." DEXs are less regulated or liquid than CEXs, They usually present more arbitrage opportunities for crypto traders. As arbitrage traders adjust the supply of tokens in a trading pair, they naturally help balance the quoted price. Conclusion Crypto arbitrage can be profitable for experienced traders familiar with the markets and understanding the risks involved. However, it is not recommended for novice traders or those unfamiliar with the crypto markets. Find more information, current crypto news and updates at https://ampraider.com/