What Is Spot Arbitrage? Cross-Exchange Crypto Price Gaps

Spot arbitrage is buying a cryptocurrency on the exchange where it is cheaper and selling the same coin on another exchange where it is more expensive, keeping the difference as profit. It is the simplest form of crypto arbitrage. The hard part is not spotting the gap but capturing it after fees, slippage and the time it takes to move funds.

Key takeaways

• Profit = sell price − buy price − fees − slippage − transfer costs.
• The two main methods are transferring coins between exchanges or holding pre-positioned inventory on both.
• Transfers add price risk, because the market can move while coins are in transit.
• Pre-positioned inventory lets you trade both legs at the same moment, but ties up capital and needs rebalancing.
• A large spread often signals a problem, such as suspended withdrawals or a different token with the same ticker.

How spot arbitrage works

"Spot" means you trade the actual coin for immediate delivery, not a derivative. Each exchange runs its own order book, so the same coin can trade at slightly different prices on different venues.

To capture a gap, you buy at the ask (the lowest sell offer) on the cheaper exchange and sell at the bid (the highest buy offer) on the more expensive one. Comparing last traded prices is misleading, because you can only buy at the ask and sell at the bid. The gap between them on a single venue is the bid-ask spread.

Every leg costs a taker fee if you use market orders, and large orders pay slippage as they eat through several price levels.

Method 1: transfer arbitrage

The traditional approach is sequential:

1. Buy the coin on Exchange A.
2. Withdraw it to Exchange B.
3. Wait for the network to confirm the transfer and for Exchange B to credit it.
4. Sell on Exchange B.

The problem is step 3. Confirmation can take seconds on some networks and much longer on others, especially when the network is congested or the exchange requires many confirmations. During that time, the price on Exchange B can move and the gap can close. You also pay a withdrawal fee, usually charged in the coin itself.

Method 2: pre-positioned inventory

Most active spot arbitrageurs keep balances on both venues in advance:

• Stablecoins on the cheaper exchange, ready to buy.
• The coin itself on the more expensive exchange, ready to sell.

When a gap appears, they buy on A and sell on B at the same time. No transfer is needed to complete the trade, so price risk during transit disappears. The catch is that inventory drifts: after the trade, A holds more of the coin and B holds more stablecoins. Traders rebalance later with a transfer when fees and timing suit them, or wait for the gap to open in the other direction.

Holding the coin on Exchange B also exposes you to its price. Some traders hedge that inventory with a short perpetual position, which makes the holding delta-neutral, meaning its value no longer moves with the coin's price.

	Transfer arbitrage	Pre-positioned inventory
Capital needed	One balance	Balances on both exchanges
Speed	Minutes or more	Both legs at once
Price risk during trade	High	Low
Withdrawal fees	Every trade	Only when rebalancing
Exposure to coin price	Only during transit	Ongoing unless hedged
Counterparty exposure	One exchange at a time	Several exchanges at once

Worked example

Assume a coin, XYZ, has these illustrative prices:

• Exchange A ask: $2.000
• Exchange B bid: $2.012, a gross gap of 0.60%
• Taker fee: 0.1% on each exchange
• Trade size: 5,000 XYZ

With pre-positioned inventory:

Step	Calculation	Amount
Buy on A	5,000 × $2.000	−$10,000.00
Fee on A	$10,000 × 0.1%	−$10.00
Sell on B	5,000 × $2.012	+$10,060.00
Fee on B	$10,060 × 0.1%	−$10.06
Net profit		+$39.94

With a transfer, assume a withdrawal fee of 5 XYZ, so only 4,995 XYZ arrive. If the price holds, you sell 4,995 × $2.012 = $10,049.94, pay a $10.05 fee, and net $29.89 after the $10,010 spent on A. If Exchange B's bid falls 0.5% to $2.00194 while the coins are in transit, the sale brings in $9,999.69, the fee is $10.00, and the result is a loss of $20.31.

The same opportunity gives a profit with inventory and a loss with a transfer once the price moves. That is why speed matters so much. Before slippage, this trade breaks even at a gap of about 0.2%, because the two fees each take roughly 0.1%. Use the arbitrage profit calculator to run your own numbers.

Why gaps persist, and when they are traps

Small gaps on major coins usually close within seconds, because many bots trade them. Larger gaps tend to appear in less liquid coins, on smaller exchanges, and during fast markets. Before trusting a large spread, check:

• Deposits and withdrawals are open for that coin on both exchanges. A persistent gap often means one side is suspended, so nobody can move coins to close it.
• It is the same token. Two unrelated projects can share a ticker, or an exchange may list a version of the coin on a different network. Compare contract addresses and networks.
• Depth is real. The best price may show only a few hundred dollars of size, and the next levels can erase the edge.
• The quote currency matches. A price in USDT on one venue and in USDC on another is only comparable after converting at the current USDT/USDC rate.

See arbitrage risks for more detail on each of these.

How ArbTide helps

The live arbitrage scanner compares bid and ask prices for the same coin across exchanges and shows spreads net of taker fees. The spot arbitrage strategy page explains how to evaluate each route before you trade.