👋 Hey there!
Cryptocurrencies have always been in the spotlight, and the idea of arbitrage – profiting from price differences across various exchanges – sounds incredibly appealing. Especially when we're all looking for new earning opportunities. But is it as simple as it seems?
My experience in this field (and specifically in creating a bot-screener) has revealed a number of non-obvious problems that can turn potential profit into "wasted time" or even losses. Let's break down these hidden challenges and consider how technology can provide answers.
- Market Speed vs. Reaction Speed: Why the "Human Eye" Can't Keep Up We live in an era of millisecond trades. Price discrepancies appear and vanish in fractions of a second.
The Reality: Add to this potential internet delays, VPNs, or simply the time it takes to switch between browser tabs. By the time you manually enter orders, the opportunity has already disappeared.
Liquidity Problem: On some exchanges or with less popular crypto pairs, liquidity might be insufficient for large orders, leading to significant slippage.
- "Eaten" Fees: Where Does Your Profit Hide? Every trader knows about fees. But in arbitrage, there are many, and they add up quickly:
Trading Fees: Even seemingly small 0.1-0.2% per trade quickly accumulate.
Inter-exchange Transfer Fees: This is probably an arbitrageur's biggest pain point. Different networks (ERC-20, TRC-20, BEP-20) have varying fees, and they can be substantial, especially for small volumes.
Slippage: When your order is executed at a worse price due to insufficient liquidity, it can be an unpredictable "tax" on your profit.
- "Frozen" Assets & Capital Inefficiency Fast arbitrage requires capital spread across multiple exchanges. This means a portion of your capital is constantly "sleeping" and not working, waiting for an opportunity.
Low Turnover: Money simply sitting in exchange accounts doesn't generate income for you.
Transfer Time: Waiting for funds to transfer between exchanges can drag on, and during this time, thousands of opportunities can fly by.
- Human Factor & Information "Noise" Even the most experienced trader cannot monitor thousands of trading pairs on hundreds of exchanges 24/7.
Burnout: Constant monitoring leads to fatigue, stress, emotional decisions, and errors.
Limited Overview: Humans are physically incapable of processing such a vast amount of data, or filtering "noise" from genuine signals. You only see a tiny fraction of the market.
The Answer to Challenges: Systemic Approach & Automation
All these challenges underscore one truth: successful crypto arbitrage demands a systemic, algorithmic approach.
That's why we, as the 27S team, focus on creating technologies that solve these problems.
We believe that the future of finance is technology, not intuition or click speed. We're building this future by creating tools for ourselves and for those who think systematically.
Interested in how algorithms can change your approach to crypto arbitrage and much more?
Join our community on Telegram!
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