AI arbitrage is a key buzzword in today’s crypto world. Have you ever come across a situation where you could not instantly earn profit in the traditional stock market because you missed price differences? Likewise, in crypto trading, several crypto markets/exchanges play a significant role in providing profits from price differences. What if AI can help you trade cryptocurrencies and earn profits? Isn’t it worthwhile? Although AI can assist, you need to do your own research before you enter into crypto trading world.
What is AI Arbitrage in crypto and how does it work?Â
Arbitrage is a method used in cryptocurrency to identify and exploit price differences using artificial intelligence (AI). In other words, you can buy crypto from one market/exchange at a lower price and sell it in another market/exchange at a higher price. In AI arbitrage, AI helps you to know which coin is performing best, at which price, and on which market.Â
It also deploys advanced algorithms to automate the arbitrage process, from finding price gaps across different platforms to helping you trade instantly and efficiently.
Let’s say Ethereum (ETH) is trading at $3,600 on ABC exchange (for example) and $3,620 on DEF exchange. If you buy ETH on the first exchange and sell it on the second exchange, you will earn $20 from the price difference. This is autonomously done by AI just to make your trading experience better and earn profits.
Types of AI Arbitrage strategies in crypto
You can tap into any of the following types of AI arbitrage systems.
Spatial arbitrage: It helps find price differences between two or more platforms.
Triangular arbitrage: As the name suggests, this type of arbitrage happens between three cryptocurrencies on the same exchange. For instance, Bitcoin (BTC) to ETH to USDT and then back to BTC. You can potentially earn a profit if there are price differences between conversion pairs.  Â
Flash arbitrage: Arbitrage bots use AI and smart contracts to gain from price gaps in decentralized exchanges (DEXs).Â
Statistical arbitrage: This arbitrage strategy helps to trade based on patterns and price trends from the past and shows you the price differences. Â
Platforms providing AI crypto arbitrage
Not all platforms use AI to trade crypto: some use bots, which are not typically AI, to bring trading results.
Binance: One of the leading exchanges using arbitrage bots for cross-pair trades.
Bitsgap: Easy-to-navigate automated crypto trading platform leveraging arbitrage and a grid trading bot.
ArbiSmart: EU-regulated AI arbitrage platform that helps execute a huge volume of trades at once.
HaasOnline: Exploits AI bots for experienced traders. It provides flexible arbitrage strategies and supports Application Programming Interface (API) with big crypto exchanges.
Risks to watch out for before you use AI arbitrage tools
Always stay alert! Crypto trading is not always easy. The very first thing you need to do is proper research on cryptocurrencies and platforms providing AI/bot arbitrage. Exchange fees can differ from one platform to another, eating into your profits. There can also be delays in transferring crypto across exchanges.
Worth noting, AI bots can sometimes make mistakes, providing wrong predictions, or even bugs can lead to losses. Be aware of scams. Avoid platforms promising guaranteed profits, meaning a positive promise amid market fluctuation.
AI arbitrage in crypto offers an efficient, smart, and hands-free way to trade, specifically for beginners. Although the profits you earn from price differences may be small, the total profit you earn over time may become significant. Now, as mentioned, all you need to do is research, understand risk factors, and start carefully. With appropriate tools in place and the right approach, AI arbitrage can potentially play an important role in your crypto journey.
