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Glossary Term

Arbitrage

Profiting from price differences for the same asset across markets — the force that keeps exchange prices aligned.

Arbitrage means buying an asset where it’s cheaper and simultaneously selling where it’s pricier, pocketing the difference. If Bitcoin trades at $63,900 on one exchange and $64,050 on another, arbitrageurs close that gap within seconds — which is why major crypto prices stay closely aligned worldwide.

Modern crypto arbitrage is dominated by bots competing over fractions of a percent, spanning exchanges, regions (the famous “kimchi premium” on Korean markets) and DeFi pools. For retail users, the realistic lesson isn’t to try it — fees and transfer times eat the margin — but to trust that visible price gaps usually reflect fees, low liquidity or withdrawal problems rather than free money.

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