Arbitrage
The practice of buying an asset on one market and simultaneously selling it on another to profit from a price difference. In crypto, arbitrageurs help keep prices consistent across different exchanges.
Why It Matters
Arbitrage is important in finance and crypto because it involves taking advantage of price differences across markets. This activity can contribute to market efficiency but requires awareness of risks and timing.
Example
For example, if Bitcoin is priced lower on one exchange and higher on another, you could buy it on the lower-priced exchange and sell it for a profit on the higher one.
Beginner Context
For beginners, understanding arbitrage can offer insights into trading strategies, highlighting opportunities that exist in disparities between different marketplaces.
Mike Starr
Founder, CryptoWizardTools · M.S. Organizational Management
Last reviewed: August 2026
Related Terms
Airdrop
A distribution of free tokens or coins to wallet holders, often used as a marketing strategy or to reward early adopters of a protocol.
Candlestick
A chart element used in technical analysis that displays four price points for a given time period: the opening price, closing price, highest price, and lowest price. Green candles indicate the price rose; red candles indicate it fell.
Memecoin
A cryptocurrency inspired by internet memes or jokes that typically has no inherent utility. Examples include Dogecoin, Shiba Inu, and Pepe.
Exit Liquidity
The buying demand that allows early holders of a token to sell at a profit. In a scam context, "providing exit liquidity" describes the situation where retail buyers unknowingly buy tokens that insiders are dumping.
Sandwich Attack
A form of MEV exploitation where a bot spots a user's pending swap, buys the token first (pushing the price up), lets the user buy at the inflated price, then sells — profiting from the user's trade at the user's expense.