Bypassing exchange restrictions for Crypto arbitrage

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The topic of cryptocurrencies as such is perhaps one of the most discussed in the world in recent years. The huge opportunities that blockchain opens up for users cannot be overestimated. But cryptocurrencies are not only an alternative option for storing personal funds but also a great way to make a profit. There are plenty of options for earning money in cryptocurrencies, but one of the most buzzed about in the last year is crypto arbitrage. For those who are not familiar with what is crypto arbitrage, as well as for those who have heard about it but do not know how it works, we have prepared today's material. We will talk in detail about what types of crypto arbitrage exist, how crypto arbitrage works, potential risks, and how proxies can help you earn more and bypass various restrictions. Let's get started.

How to earn with Crypto arbitrage

To begin with, it's worth getting straight into how cryptocurrency arbitrage works and what exactly people make money from. Like any other type of arbitrage, it consists of reselling a product for the benefit of the arbitrageur. In the case of cryptocurrencies, you need to buy and sell the crypto with the difference. But at first glance for someone new in this field it may not be obvious, because it is not quite clear how you can sell bitcoin with different prices or USDT with different prices. This is the beauty of cryptocurrencies because since you can transfer funds, including between different exchanges, almost instantly, it allows you to earn on the resale of the same bundles. Crypto arbitrage trading allows you to make money on the differences in the price of crypto, your task is only to look for or use such bundles that allow you to make a net profit and earn on crypto exchanges.

If we try to explain in a few sentences what cryptocurrency arbitrage is - it is the purchase of an asset on an exchange, and the goal is to sell the same asset somewhere where the demand for it is lower and the price is correspondingly higher.

This type of arbitrage is actively developing because you don't need any proof of income, checks from banks, and other complications that a regular swift transfer creates. Although many countries are slowly trying to regulate the flow of cryptocurrencies, at the moment, when you deposit funds to your cryptocurrency wallet, you can safely make many transactions and be invisible to banks. Problems may arise only when withdrawing these funds to real bank cards and in a few other cases, which we will also talk about further. But at the moment it is a great way to earn money every day if you have the necessary knowledge in the field it will turn into a routine process and every month you can only increase your income. Our task today is to familiarize you with the basics of crypto arbitrage and show you how it works with examples.

What are P2P transfers

Before jumping into the types of crypto arbitrage, we need to understand a few basic things. First, we need a basic understanding of the principle of P2P.

P2P means person-to-person or peer-to-peer, which implies a transfer from one person to another. Since such a request is quite popular, at the moment there is a very large number of sites that provide opportunities for such an exchange of funds from person to person. Beneficial such transactions, in this case, can be both for the buyer and the seller because you are not limited to putting an offer at the price you are interested in. Accordingly, the earnings on P2P are just to find a favorable for you offer and then perform resale, but with a different, more favorable rate.

Secondly, you need to consider the risks involved in such transfers. The point is that the platform on which you make the exchange, simply acts as an intermediary in the transaction, and the successful completion of the transaction directly depends on both of its participants. Risks appear here only if one of the parties did not fulfill the terms of the transaction and, accordingly, it was not successfully closed, which can lead to loss of funds, because quite often bundles in crypto arbitrage do not live long and such an unsuccessful transaction can be followed by loss of funds. There are also various tricks and scam techniques on crypto exchanges, which scammers use to deceive users during the exchange, but we will talk more about this a little later.

Now that we have sorted out the most basic points, we can move on to the types of crypto arbitrage.

Types of Crypto Arbitrage

An interesting feature of crypto arbitrage is that you can earn in this field in different ways. There are both opportunities to limit yourself to working on one exchange and involving quite a large number of different pairs of cryptocurrencies, foreign exchanges and even different bank accounts. Usually, the more complex and interesting you can come up with a bundle, the more likely it is that you'll be able to earn a decent percentage per one circle on it. But this doesn't always work either, as you need to realize that you will successfully go through all the stages of translation, there will be no difficulties anywhere and the bundle is really worth the time and effort. Therefore, we recommend starting with the simplest options, and as you gain experience and capital, increase the complexity, and look for more and more options. Let's see what types of cryptocurrency arbitrage exist:

Intra-exchange arbitrage

Intra-exchange arbitrage consists of reselling some cryptocurrency on the same market. It works since there may be several markets on a certain exchange, or due to the possibility of buying some crypto for real currency (Fiat) and reselling it for a profit. On the stock market you can see the price of a certain cryptocurrency, say 1.3$ at your current exchange rate, and on P2P you can sell it for 1.4$. This is the difference, but the problem is that this way of arbitrage is very difficult to make a good profit, because on P2P platforms the price is usually also on average equal to the rate on the stock market. Therefore, you should not expect big percentages that you can get from each round, you can earn well in this way only by having a very large bank, as well as processing all the orders that you place on P2P, which will also take some time for you. So it is a full-time job and you need to view it that way. Nevertheless, if you have a large starting capital, then this is probably the safest and easiest way to make money from cryptocurrency arbitrage, but it is quite rare for beginners to have a good starting capital. That's why a lot of people use other methods of arbitrage, which we will talk about next.

Inter-exchange arbitrage

This type is already a more profitable method of arbitrage because it requires working with several exchanges at once. The point is that you buy an asset on one of the exchanges and sell it on another at a more favorable rate. The logical question in such a situation is where does this difference come from? The idea is that trading on the exchanges is quite active, and therefore on one of the exchanges there may be a large demand for any of the assets, which will reduce its price, and on another exchange the demand may be lower and the price for the same asset will be higher. It looks like an ideal way to earn income, where the main requirement is to search for various smaller exchanges and monitor the price of a certain asset on them, but there are also problems here and it's not easy to sell crypto with different prices. First of all, you should always take into account the commission on transfers, if any, and calculate the profit taking this factor into account. Secondly, at the moment there are quite a lot of bots working on exchanges, which are constantly looking for such loopholes, which arbitrageurs take advantage of. Therefore, in this method of arbitrage is quite important to quickly close transactions, because any delay can lead to the fact that the loophole will be inactive.

International arbitrage

International arbitrage is probably the most profitable type of crypto arbitrage at the moment. It is beneficial because if you understand the market well enough, you can make a good profit taking into account the economic situation in the world. More specifically, you will also need to consider the exchange rates of different countries and look for loopholes there. Say, using your local currency you can buy USD, send it to another country, then buy the same USDT there and withdraw it back to the local currency. There are quite a few pitfalls here too, as it's dealing with currencies and international transfers, and it's not as easy to do as a regular cryptocurrency transfer on an exchanger. You will also need foreign bank cards and verified KYC (Know your customer) accounts on exchanges where identity verification is mandatory. Therefore, despite the highest benefits of all three methods, you will also need a lot of additional instruments, and not all of them can be easily obtained.

We now propose to look at specific bindings in action and the algorithm of operations.

The process of arbitrage in the Crypto niche

To fully understand how to do crypto arbitrage, we will show the process of a full circle, all the steps, and specific numbers you can earn from one such circle on the example of a P2P bundle. But remember that there are different bundles, you can earn a higher percentage or lower, and the amount of earnings will directly depend on your deposit, which you transfer. But for you to understand the whole principle of work, we will show you all the steps.

  1. The first thing you need to do is to register on all major crypto exchanges, first of all on Binance, as quite a large part of the newcomer's operations will start and end on this platform. Pass all verification stages, after which register on other major exchanges, for example - Coinbase, Bybit, WhiteBit, Huobi, OKX, and others, as for P2P arbitrage you will need to look for bundles between different exchanges. Take a few days, and go through all the verification stages on all possible trust exchanges, as having accounts on each of them will allow you to find more profitable bundles.
    • At the same time avoid suspicious exchanges, and register only on large and trusted services, nowadays there are quite a lot of dubious exchanges, and an attempt to realize a bundle through one of these platforms can turn out to be a loss of money. We will talk more about such exchanges a little further, but for now, focus on searching and registering on trusted sites.
  2. Then we search for information about a particular bundle that is currently working, or we find such a bundle ourselves. Such bundles appear and close quite quickly, so you need to get into the sphere well enough and look for these bundles daily, or have a communication channel where users can share the found bundles. But more often than not, users will not be interested in sharing such a bundle, and we recommend not to pay attention to offers from people to buy a working bundle with crazy profits, as the probability that you will lose money on this is quite high. Therefore, we will not give specific recommendations on where exactly to look for these bundles or whether you should look for them yourself, we will only tell you how a simple bundle works in P2P arbitrage. The scheme looks like this:
  3. en 1.png

    The designations here are as follows:

    • Exchange - the site on which we can perform a P2P transaction;
    • Cryptocurrency - a specific crypto on the platform.
  4. Now let's complicate this bundle to see the full picture and calculate whether there is profit for us in such a bundle or not. Above we gave an example of how a simple bundle works, in which we see that there is a difference in price between the same pair of cryptocurrencies, for example, let's say we are talking about the pair LTC/USDT (LiteCoin/USDT). We can take Binance as an example of E1 and Bybit as an example of E2. Thus, we understand that if we buy a pair of LTC/USDT on Binance, we can transfer it to Bybit, sell it there at a more favorable rate, and make money on it. But not everything is so simple, as we need to take into account some other factors. And we have to take into account the commission as well and do some simple math to account for the commission on each particular exchange. In the scheme, it looks like this:
  5. en 2.png

    If at recalculation of all commissions at all stages we still get profit, then the bundle is working and we can proceed to its realization.

    • At the initial stage, it is recommended to do it with small amounts because only with experience you will learn to quickly conduct operations and close such bundles while they are still active.
  6. Also, this scheme can easily be modernized to include several combinations of crypto pairs. On the plus side, such bundles can sometimes be found even within the same exchange, but it will be extremely difficult to do so even if you see it, as this window can quickly close. So quite often you will still have to factor multiple crypto exchanges into the equation. But such a "Triangle" scheme will look something like this:
  7. Ru_En 3.png

  8. Let's assume that you have successfully made such a transaction between different exchanges, and were able to earn on the realization of such a bundle. But to calculate as accurately as possible the real profit that you can get, we think that it is also necessary to take into account the return of funds to the starting point. And this is not E1 (in our case, Binance), as you might think, but your bank card, from which you deposited funds. This is an important point that many beginners do not take into account, because sooner or later you will have to withdraw funds back to your card to use them. Therefore, the circle can be considered complete and finished if the funds are returned to your card, so be sure to take this point into account.
    • Quite often you will have to deal with foreign exchanges, where there will be a very favorable rate for a certain bundle, but in this case, you may have problems with the withdrawal of funds to your original card, even taking into account that the currency may be different.
    • There may also be an additional fee on Swift transfer. Therefore, to maximize the comfort of transferring funds from abroad, you can resort to the help of your friends or family members who, say, have a card from a bank in a European Union country, which on some exchanges opens up excellent opportunities for you. It is not recommended to use the intermediaries people who can take your funds, If case you do not have acquaintances in the countries you need, try to use the services of various intermediary services, such as ADVcash, but take into account that when using their services there are also certain costs.
  9. Also worth considering is the factor of bots, which are quite active in searching for such bundles across all possible crypto exchanges. These bots can both play to your advantage, and when using them you will not need to search for bundles yourself, and becomes a problem for you if you do not have options to buy such a bot. But it is also important that such bots do not find all the bundles that are available on the network, and often quite complex bundles, especially taking into account the real bank transfer, they may not find, which opens up opportunities for you to search for them yourself. Simple bundles such bots can really find, but at the same time, if the bundle has become obvious to the bot, then arbitrageurs using the services of such programs can quickly enough close the possibility of using such a bundle. So having them with the sphere does not take away the factor of manually searching for bundles. The more interesting the combination you can find, the more likely it is that this bundle will live long enough for you to make at least a few rounds and often even get a good spread for such a combination.

We have given an example of a simple bundle, where we also showed how you can implement it through several exchanges, but in general, you are not limited to modifying these bundles as you see fit. For example, if you see that by adding + several more exchanges or even banks of different countries with different currencies you have additional profit, then you can and should do it if you see enough that it is quite realistic to make such a deal. All the profit in the sphere lies in finding the difference between various trading assets, whether it is cryptocurrency or real national or international currency. Cryptocurrencies open up ways for you to transfer funds quickly, but a large enough percentage of your profit will be in finding non-obvious schemes, and that is the job of an arbitrageur.

Potential risks and nuances in Crypto arbitrage

Now it's time to talk about the risks that exist in this sphere, and there are quite a lot of them, so all these things are also important to understand when you enter the cryptocurrency market.

  1. The first question, which is of concern to everyone in general, is crypto arbitrage legal? From the point of view of the law, there are no obstacles to engaging in cryptocurrency arbitrage and you are not restricted in starting to engage in this kind of activity. But problems can certainly arise, and they appear when you have figured out how to earn money in this field and started to do it successfully.
    • The first problem is, of course, various banking restrictions, primarily related to tax reporting. Since on the crypto exchanges themselves, you are practically not restricted in any way to conduct large transactions daily, sooner or later you have to withdraw these funds from the exchanges to your bank card. This becomes a reason for your bank to check with you where these funds come from and whether you pay taxes according to the laws of your country. If large amounts are constantly circulating in your bank account, they can be simply blocked or frozen until you confirm to the bank that you are a law-abiding taxpayer. So we won't make any specific recommendations here, you have to look into your bank's restriction policy yourself and what approximate amounts can start to cause problems.
    • The same applies to your tax legislation, we can only recommend you pay taxes and then you will not have to look for any workarounds for the withdrawal of funds in a gray area, which are also certainly presented in this area. As soon as you start earning enough money on cryptocurrency arbitrage, take into account your tax rate when calculating your monthly profit, and then you will not get any problems from the bank.
  2. Another important factor is possible losses, especially at the initial stage. The whole problem is that it is very difficult to find good working bundles, especially if these bundles are short-term, and you may come across scammers who will try to sell you such a bundle, but in the end, they will either not give it at all, or it can quickly become inactive and you will not return the invested funds. Therefore, searching for bundles yourself excludes intermediaries in the form of various scammers, but entails risks in the loss of funds, because you may find a seemingly excellent bundle, but while you conduct a transaction between exchanges, the conditions will change and you will not make a profit or even lose a small amount of money.
  3. At the initial stage, try to conduct transactions with a small bank until you are sure that some of the bundles you have found work, or at least until you understand exactly how all the steps of transferring funds work and go through them yourself several times.

  4. There are also quite a few different scammer schemes that are used to scam inexperienced users, for example:
    • Even on such a large platform as Binance, there is a possibility of refunds in P2P transfers, when you seem to have already seen that the cryptocurrency was received by you, but in fact, all the necessary confirmations have not yet passed, and in this case, you can lose all the funds for the transfer, because the scammer will simply cancel the transaction when he receives the funds from you.
    • Also, some scammers try to transfer another currency in P2P transactions, cheaper than the one you requested. If you are not careful, you may receive 50 Indian Rupees instead of 50 USD in a P2P transaction, which is much less than 50 USD at the current exchange rate.

    There are a lot of such schemes, we have given only some of them as an example, but most often such schemes play on the inexperience or inattention of the user, so always double-check the correctness of all the conditions of the transaction you are conducting.

  5. It is also worth remembering another, separate type of fraud, when you are lured to some suspicious crypto exchange, or under the pretext of selling you a working bundle you will be given to make a few rounds, and on the last one, you simply will not send the funds back. There are a lot of videos on YouTube that appear daily, which show how you can buy crypto on Binance, and immediately withdraw it to some dubious exchange, but the rate on it is so good that many people want to try it. In 99% of cases, such bundles that you see on YouTube simply lead you to a fraudulent exchange, and when transferring funds there, you can simply lose them.

Therefore, work only with large and trusted exchanges, and always remember that huge spread percentages rarely exist and most often it is just a scam. Build your expectations of earning realistically, and take into account that to earn 2-3% percent of the spread for one round is considered an excellent result.

Why and what type of proxies to use for Crypto arbitrage

But are there any real ways to somehow scale your income in cryptocurrency arbitrage using supporting tools? Yes, there are such ways, although they are not the most obvious. But proxy servers can help you in this case, as well as anti-detect browsers, using which you can get some boost in arbitrage. What kind of boost? Let's take a look at a few specific cases of using proxy in arbitrage.

Multi-accounting in cryptoarbitrage

Proxies can help you bypass bank restrictions on crypto exchanges, as it is unlikely that you will be able to use more than one account for your credentials. However, if you have friends or relatives whose credentials you can register additional accounts with, significantly speeding up the arbitrage process by conducting more rounds from different accounts, you will also need proxies and separate profiles in anti-detection browsers so that you can have a separate IP address for each account to access crypto exchange. Multi accounting in crypto arbitrage is cut off by almost all major crypto exchanges, so here you should also be quite careful in choosing proxy servers.

  • It is recommended to use residential proxies for this purpose, as they have the highest trust factor among all types of proxies, which is almost guaranteed not to cause any suspicion to you from the exchange. You should not save money on proxies in this case, as you may potentially have quite a large part of your budget on each of your accounts, and it is not worth risking your funds by choosing a cheaper variant of the proxy type.

Bypassing regional restrictions

Also, proxies are quite often used to bypass crypto exchange restrictions, such as regional restrictions. At the moment, even major exchanges like Binance may not be available in some countries, or they may not have the option to deposit any sub-sanctioned currency. Therefore, in such a situation proxy servers become an indispensable tool, because you can change your IP address to a country where there are no such restrictions, and very many arbitrageurs work daily in this area using proxies.

  • As for what proxies are best to choose, everything will depend on the number of accounts you will register. If the number of accounts is small, say up to 10, you can do with static proxies, but it is recommended to buy proxies of ISP format or residential proxies. If you need more accounts, you can consider mobile proxies with a dynamic range of IP addresses, as they also have a high enough trust factor and when used correctly with manual rotation become an excellent cost-effective option for registering accounts.

Faster closing of deals

Another non-obvious way to use proxies in arbitrage is to try to find an IP address as close as possible to the servers of a particular exchange. Why, you may ask? It is done so that your delay concerning the exchange becomes the minimum possible, which will allow you to conduct transactions a little faster, but in the case of crypto arbitrage, it can play a significant role.

But there is a logical contradiction here because logically when using any proxy server, you increase the number of transit connections, thus the ping will be higher than it was before. This is quite a reasonable point, as the essence of proxies is exactly that, but in our case they can help the arbitrageur if a proxy close to the exchange is chosen. The point is that in theory, increasing the number of intermediate "points" should increase the delay, but in practice, it is somewhat different - the quality of interactions between these "points" plays a role. It happens that a path of 3 points transmits packets slower than a path of 10. This is why proxies are used by arbitrageurs for such a task - the ability to build a new connection route that may be faster.

  • Residential proxies are better than ever for this task, as they can fine-tune targeting by country locations, cities, and even specific ISP providers. The server locations of specific exchanges are publicly available, and then you can use residential proxies to try and pull off this trick. But remember that this does not always work, and quite often you need to try several different proxies to find the right route because when you use a proxy of each individual server you will have its unique route. And here it is not suitable to adopt the experience of someone from other arbitrageurs, because the end point of connection, namely you, will also be unique.

Now that you know quite a lot of information about cryptocurrency arbitrage, all you have to do is start practicing and learning all the other pitfalls in the process. The field is too big to cover everything in one material, but if you can master the basic principles and put them into practice, you will see that it works and you can make money at it. The result will depend on the amount of time invested, starting capital, your diligence, and your understanding that the awareness of many things will come only with mistakes, which you will have in any case. Therefore, be prepared for this and build your expectations of earnings in this area realistically, so that you always clearly understand what you can count on. And do not forget that if you want to bypass the restrictions of crypto exchanges in any way, you can not do without proxy servers, which in this case serve as an indispensable tool.


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