The threshold for arbitrage in the crypto world is not that high, and there are several ways for newbies to get started.

Arbitrage, in simple terms, is making money by exploiting price differences between different trading pairs and different exchanges. There are several arbitrage models in the crypto world:

Cross-exchange arbitrage —— The simplest and most straightforward method. The BTC price on exchange A is 10000U, and on exchange B it is 11000U. Buy directly on A and sell on B to earn a profit of 1000U. The downside is the long withdrawal time, high fees, and small exchanges are prone to failure. Such opportunities are now rare.

Triangular Arbitrage — The difficulty has increased. By utilizing the price mismatches between BTC/USDT, BTC/LTC, and LTC/USDT, a closed loop is formed through three transactions to profit from the price difference. Theoretically, a single trade can yield significant profits, but real-time monitoring tools are required, as manual operations can no longer keep up. Someone made a fortune in Shenzhen relying on this, but opportunities are becoming increasingly scarce.

Arbitrage —— The most popular model at the moment. Spot BTC 60000U, perpetual contract quoted at 66000U (10% premium), you buy spot and short the contract, and when the contract returns to the spot price, you close the position to make a profit. The core logic is that the contract price will eventually return to the spot, and this process is the profit.

Arbitrage in contracts can still be played in various ways:

• Futures contract: A quarterly contract with a 10% premium means stable returns, but it ties up capital for a long time.
• Funding rate arbitrage: Sometimes the funding rate for perpetual contracts is particularly high (positive rate means retail investors pay long positions), and even if the spot-contract price difference is small, one can still make money from the funding rate.
• Cross-exchange Arbitrage: The price differences of contracts between Binance and other exchanges are often larger, with more opportunities.

The core of doing Arbitrage well:

Large coins (BTC/ETH): small price difference, large capital capacity, low slippage, but slow to revert.

Small coins (altcoins): large price differences, high fees, quick returns, but limited capital capacity, prone to sharp rises and falls leading to forced liquidation.

Threshold Reality：

• Simple Arbitrage (Cross-exchange Arbitrage): Low threshold but opportunities are gone.
• Triangular Arbitrage: Requires specialized monitoring tools, competition is saturated.
• Arbitrage in contracts is the current mainstream, but it requires over 1 million in funds, professional automation tools, and a deep understanding of risk control.

Summary: Arbitrage in the crypto world is essentially a low-risk but also low-return strategy, with monthly returns between 5% and 20% (performing better in bull markets). It requires a keen sense of the market and good risk management. For small retail investors, engaging in arbitrage is not very meaningful, as fees will eat up most of the profits. This is a game for institutions and large players.