Is Crypto Arbitrage Profitable? What Is Left After Real Costs

Crypto arbitrage can be profitable, but most of the opportunities you can see are not: after taker fees, slippage and transfer costs, the gaps that remain are small, short-lived or too thin to trade at size. The traders who make money consistently are the ones who price every trade after costs, keep capital ready on the right exchanges and skip the spikes that look best.

This guide works through the numbers behind that answer.

Key takeaways

• Fees decide small trades. Four taker fills at 0.05% cost 0.2% of each leg, which erases most funding gaps on major coins.
• The gaps that look biggest usually revert. Extreme rates on thin markets last hours, not the week the headline yield assumes.
• Size has a ceiling. Slippage grows with size, so every opportunity has a most profitable amount, often only a few thousand dollars.
• Persistent funding spreads are the most reliable source of profit for traders who are not competing on speed.

Where the profit comes from

There are three main sources, and each has a different catch:

Source	How long it lasts	The catch
Price gaps between exchanges	Seconds on major coins	Needs funds pre-positioned and fast execution; wide gaps often mean withdrawals are suspended
Funding rate spreads	Hours to weeks	Rates change every interval and can reverse
Cash and carry	Days to months	Returns are modest and capital is tied up on two venues

The cost stack

The gross spread is only the starting point. A trade is worth doing only if the spread beats all of these together:

• Taker fees. A price trade has two fills; a funding trade has four (open and close on both exchanges). At a typical 0.05% perpetual taker fee, a funding trade costs 0.2% of each leg before it earns anything. See maker vs taker fees.
• Slippage. A market order walks the order book. On a liquid coin this costs almost nothing at small size. On a small coin it can cost 1% to 2% of the position to get in and out, even at $100.
• Transfers. Moving coins for a price trade adds a withdrawal fee, a network fee and minutes to hours of waiting, during which the gap can close.
• Basis between the two perpetuals. Opening when one perp trades below the other and closing after they swap loses money on price even though you are hedged.
• Idle capital. Margin has to sit on both exchanges, and part of it stays unused as a buffer against liquidation.

Worked example 1: a funding spread on BTC

Assume BTC funding is 0.0100% per 8 hours higher on the short exchange than on the long exchange. You put $500 on each exchange, $1,000 in total, and hold for 7 days (21 funding periods).

• Gross funding: 0.0100% × 21 × $500 = $1.05
• Four taker fees at 0.05%: 0.2% × $500 = $1.00
• Slippage on BTC at this size: about $0.05

Net profit: about $0.00. The spread is real and stable, but at standard fees it pays for nothing but the fees. Traders who profit from major-coin funding spreads usually pay much lower fees through VIP tiers or maker orders, or hold for weeks.

Worked example 2: a persistent spread on a mid-cap coin

Now take a coin whose funding gap has averaged 0.1500% per 8 hours over the last week. Same $500 per leg, same 7 days.

• Gross funding: 0.1500% × 21 × $500 = $15.75
• Taker fees: $1.00
• Slippage in and out at 0.6% of the leg: $3.00

Net profit: $11.75, or about 1.2% of the $1,000 in a week. That is a good trade, and it is what a working funding strategy tends to look like: a steady gap, costs that are a fraction of the gross, and a return measured in single-digit percent per week.

Worked example 3: the spike that was not an opportunity

A small coin shows a gap of 0.9% per 8 hours right now, because one exchange's rate has jumped to an extreme. Projected over 7 days on $500 per leg, that is $94.50 of gross funding, and it tops every ranking sorted by current rates.

On a real pair like this, the average gap over the previous days was negative: the rates had been lower on the short side most of the time, and the spike lasted a few funding payments. A trader who opened at the spike would have paid the fees and then lost on funding.

This is why a scanner should rank funding opportunities by what the pair has actually paid recently, not by the rate this minute. The funding rate history of a pair shows whether a gap has lasted.

Why size has a ceiling

Slippage is not a flat cost. On one small-cap pair we measured, getting in and out of both legs cost 1.7% of the position at $100, 2.2% at $1,000 and 4.7% at $10,000. A spread that nets well at $500 can lose money at $10,000 on the same pair.

So every opportunity has a most profitable size, set by the order books on both exchanges. For small coins it is often a few thousand dollars per leg. This is also why arbitrage returns do not scale the way a fixed yield would: doubling your capital rarely doubles your profit.

Who makes money with arbitrage

The traders who profit consistently tend to share a few habits:

1. They know their real fees, and use VIP tiers, fee discounts or maker orders to lower them.
2. They keep capital on the exchanges they trade, so they never need to transfer at the moment an opportunity appears.
3. They judge a spread by its history, not its current value, and skip thin markets at extreme rates.
4. They size to the order book and stop adding when slippage eats the edge.
5. They set exit rules for when a funding spread narrows or flips.
6. They let tools do the watching. Opportunities come and go around the clock, so alerts or bots do the monitoring.

How to check a trade before you take it

Run the numbers on every trade: gross spread, your fees, slippage at your size and the holding period. The funding rate scanner does this live for your balance: it ranks coins by the net profit of each pair over the period you choose, using the pair's recent average gap, four taker fees and order-book slippage. The price arbitrage scanner shows routes after fees with transfer status, and the funding arbitrage calculator runs the same math with your own inputs.

Profit is only half the question. Arbitrage risks covers what can go wrong on the way, and is crypto arbitrage legal? covers the rules and the scams to avoid.