Picture the same bag of coffee beans priced differently in two shops on the same street. Buy from the cheaper shop, sell to the dearer one, pocket the difference. Crypto works the same way, except the shops are exchanges and the price gap usually lasts seconds rather than days. Every venue keeps its own <a href="/glossary/order-book/">order book</a>, and each book reflects only the buyers and sellers standing in front of it, so prices drift apart naturally before being pulled back together.
There are several shapes this takes. Cross-exchange arbitrage moves the same coin between two venues. Triangular arbitrage loops through three trading pairs on a single venue and ends up back where it started with a little extra. Cross-venue arbitrage between a <a href="/glossary/decentralized-exchange/">decentralised exchange</a> and a centralised one is common, because on-chain pools reprice only when someone trades against them. In practice, nearly all of this is done by software, because a human cannot click fast enough.
The honest caveat is that arbitrage is far less free than it sounds. Trading fees, withdrawal fees, network fees and <a href="/glossary/slippage/">slippage</a> all eat the margin, and a transfer that takes twenty minutes to confirm can arrive after the gap has closed. You also need capital sitting idle on several venues at once, which carries its own custody risk. A gap that looks large is often a warning sign: a halted withdrawal, a thin market or a broken price feed.
Key takeaways
- Price gaps between venues exist because each exchange matches only its own buyers and sellers, not a global pool.
- Fees, transfer times and slippage decide whether an apparent gap is actually profitable, and they usually shrink it to nothing.
- An unusually wide, persistent spread is more often a symptom of a problem at one venue than a genuine opportunity.
Arbitrage — frequently asked questions
Can a beginner realistically do crypto arbitrage by hand?
It is very difficult. By the time you have spotted a gap, funded both accounts and confirmed a transfer, automated systems have usually closed it. Manual attempts also concentrate two risks at once: money sitting on exchanges you do not control, and fees you may not have fully counted. Understanding arbitrage is genuinely useful for reading markets, even if you never trade on it.
Why do exchanges show different prices for the same coin?
Because there is no single global crypto price. Each venue has its own pool of orders, its own users and its own liquidity, so its price reflects local supply and demand. Differences also persist when moving money in or out of a venue is slow, expensive or restricted. The aggregated figures you see on data sites are averages across many venues, not a price you can trade at.
Related terms
LiquidityOrder BookDecentralised Exchange (DEX)Centralised Exchange (CEX)Bitcoin Dominance All terms →New to crypto, or filling in the gaps? Work through the essentials in Learn, browse every term A–Z, or see live prices for the coins these concepts power.