Is Arbitrage Alive In 2023?

For the second year now, bloggers, tiktokers and media authors have been talking about the death of arbitrage. At the same time, we still see influencers who entice subscribers to sign up for arbitrage training. Let's try to figure out what is actually happening with the arbitrage market in 2023: how viable this area is, and whether it is possible to make money here.

What Is Arbitrage

Let's start with the basics. If you already have an idea about this market, you may move on to the next subheading.

Arbitrage is a strategy that allows traders to benefit from differences in prices for the same asset across different markets. This strategy is possible due to the fragmentation of the market. The simplest example of arbitrage involves buying a currency on one exchange at a lower price and selling it on another exchange at a higher price.

How Has Arbitrage Changed Over the Last 10 Years

The first arbitrage connections arose at the beginning of the era of online trading, simultaneously with the first online exchanges. At the same time, arbitrage strategies (reselling an asset on different markets) existed long before.

As soon as different markets became available to traders, and as soon as the most attentive of them discovered space for arbitrage, they immediately began to make money on it.

The first connections were as simple as possible.
Example 1
Let's say that on exchange A the price of EUR is $1.05, and on exchange B it is $1.06. A trader can buy 10,000 EUR on exchange A and simultaneously sell them on exchange B, benefiting from the difference in prices and making a profit of $100 (minus commissions and transaction costs).

Example 2

Now let’s look at an example of cryptocurrency arbitrage. Let's say we notice price discrepancies between BTC, ETH, and USDT on exchanges A, B, and C. And if we convert $27,000 BTC through ETH to another, then through USDT to a third, and then back to BTC, we can get the output: let's say $27,100.

These were rather primitive examples. In the early days of arbitrage, such schemes actually worked, and the pioneers made huge X's on such spins. Today the market has moved further. There are more arbitrageurs, competition has arisen, services for tracking arbitrage opportunities and bots for auto trading have appeared.

Does this mean that arbitrage is dead? Not at all. It has evolved. Now traders are finding more complex schemes where the scrolling is carried out in three or more stages. An example of such a scheme can be seen in this DarWin video.

Example 3

So, the market has become more complex over the last ten years. Arbitrage used to be easy to do, and it was essentially easy money. Arbitrage today requires deep market understanding and experience. Therefore, more and more traders prefer to trust professional teams like DarWin and receive income.

Does Arbitrage Have a Future

Absolutely yes. However, this activity may become even more difficult. New opportunities may involve more and more stages, their lifespan will continue to shorten, and more advanced programs will have to be used to arbitrate effectively, but arbitrage opportunities will remain. And those who really know this will continue to arbitrate.