Crypto Arbitrage Spread

Crypto arbitrage between exchanges: spread, fees and execution risk

The idea behind arbitraging between centralised exchanges, classically Binance against Coinbase but also Kraken, OKX, Bitstamp, Mercado Bitcoin or Foxbit, is simple enough. You buy a crypto asset where it's cheaper and sell it where it's dearer, keeping the difference. The percentage spread comes out as spread% = (P_high - P_low) / P_low × 100, and your gross profit per BTC traded is profit = (P_high - P_low) × qty - fee_buy - fee_sell - withdraw_fee. On liquid pairs such as BTC/USDT or ETH/USDT the spread usually sits around 0.1–0.5%. When things get stressful (the FTX collapse, ETF flows, a jittery weekend) it can widen to 1–2%.

Doing this by hand is rough. Moving BTC between exchanges takes 10–60 minutes for on-chain confirmation, and the spread has usually closed long before your transfer settles, so you might sell at a worse price or even watch the spread go negative under you. The professional desks sidestep that by keeping pre-funded balances on both venues and running bots like Hummingbot, 3Commas or Coygo that close both legs in milliseconds. Taker fees of 0.1% per side already swallow half of a 0.5% spread, and then there's the network withdrawal fee on top (USD 1–5 for BTC, USD 0.5–2 for ETH on L2). The “free lunch” here is both rare and quick to vanish.

Applications and Brazilian compliance

Use it to spot opportunities as they happen, to check whether a given spread actually clears the taker+maker+withdrawal fees, to model triangular arbitrage (3 pairs on the same exchange) or the cross-exchange kind (same pair across 2 exchanges), and to work out how much capital you'd need pre-funded on each venue. In Brazil, once your monthly volume tops R$ 30,000 every operation has to be reported to the Receita Federal through the Coleta Nacional system (IN RFB 1.888/2019); the BCB watches international flows through SCE-IED. Capital gains above R$ 35,000/month are taxed at 15–22.5%.

FAQ

Is crypto arbitrage risk-free? Not at all. You're exposed to execution time, network congestion, exchanges freezing withdrawals (FTX, Bittrex), KYC/AML blocks, a deposit that lands late, and the spread flipping on you before the transfer ever settles.

How much spread does it take to be worth it? On liquid pairs, figure something north of 0.5% after fees. Illiquid pairs (a few BRL pairs on Brazilian exchanges, say) need 1–3% just to absorb the slippage you'll hit walking the order book.

Bot or manual? Bot, realistically. By 2026 the manual route barely works, since professional desks and market makers mop up 99% of opportunities in under a second. Lacking low-latency infrastructure and capital already sitting on both venues, your odds of clearing a net profit are slim.