crypto mining</a> operations; therefore people feared that a sudden shock like this could give a massive blow to the industry. Which, of course, would affect crypto prices, and cause financial losses for most traders.</p>\n<p>Naturally, this news caused a wave of FUD in the crypto world, as investors and traders became concerned about saving their money. As time later revealed, the fears were justified, as China really did implement the crypto ban, and the effects on the market were felt by everyone.</p>\n<p>This was an example of <strong>FUD caused by unsettling rumors</strong> that eventually turned out to be true. But it&rsquo;s not always the case. In reality, usually, it&rsquo;s quite the opposite.</p>\n<p>Sometimes false rumors begin making rounds on social media, and if no respected figure steps in to deny them in time, the waves of FUD can cause real damage. And in cases like this, the damage comes from the fact that unverified information affected traders&rsquo; emotions, and they all gave in to fear, uncertainty and doubt.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is FUD: This rumor is false!\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what-is-fud-02.jpg/" alt=\"What is FUD: This rumor is false!\" width=\"1000\" height=\"589\" /></p>\n<p>Here&rsquo;s an example. Several months before the rumors about China&rsquo;s ban, in May 2021, the word began spreading that <strong>the US Treasury was planning to strictly intensify crypto regulation</strong>.</p>\n<p>FUD quickly spread, and led to a significant drop in the prices of such cryptocurrencies as <a href=https://www.bitdegree.org/"/crypto/buy-bitcoin-btc/">Bitcoin and <a href=https://www.bitdegree.org/"/crypto/buy-ethereum-eth/">Ethereum. &nbsp;As the prices began falling, people began panicking. In order to save their investments, many traders rushed to sell their crypto assets, which, in turn, only further accelerated the spread of the unpleasant sentiment and the decline in crypto prices. Even though all of this was caused by a false rumor, it created a vicious circle, and a snowball effect.</p>\n<p>So, that&rsquo;s an example of how false news and fake information can cause FUD. As you can already tell, <strong>when it comes to FUD, a savvy investor must always remain sharp and vigilant</strong> in order not to fall prey to rumors taken out of thin air.</p>\n<p>There are a lot of similarities between how rumors function in the crypto market, and in real life. Sometimes they turn out to be true, sometimes, they get debunked as pure nonsense. But, there&rsquo;s one more element that needs to be considered when talking about what is FUD in crypto investing. Just like gossip, <strong>FUD is often created by people who have particular goals in their minds</strong>. <em>And these goals can get pretty sinister.</em></p>\n<p>Market manipulators or competitors of a particular cryptocurrency, or a crypto-related company, love FUD. If the rumor doesn&rsquo;t get debunked fast enough, the coin, or a company that's surrounded by artificially-caused clouds of FUD can get damaged.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is FUD: Market manipulators.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what-is-fud-03.jpg/" alt=\"What is FUD: Market manipulators.\" width=\"1000\" height=\"600\" /></p>\n<p>As mentioned before, <strong>FUD causes panic-selling</strong>, as traders try not to lose their investments. So, if the FUD is targeted at a particular coin, it can lead to a significant drop in its price. If the FUD doesn&rsquo;t get dispersed quick enough, it can lead to a loss of confidence in the coin, the company, or even the entire industry, as people begin to literally feel fearful, uncertain and doubtful about continuing to invest their money into it.</p>\n<p>But then again, where there are losers, there are also winners. Market manipulators understand this very well, and every time they notice an irrational behavior becoming more and more prevalent in the market, they begin sensing new opportunities.</p>\n<p><strong>If the rumor is false, it will eventually get debunked, the FUD cycle will come to an end</strong>. But until then, the artificially created FUD does its job for them.</p>\n<p>If people began abandoning a certain coin, it would lead to its decrease in value. This opens up opportunities for market manipulators to rush in, buy this coin at a lower value, and then, once it gets back on its feet, sell it at a higher price than they bought it for.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is FUD: Profit.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what-is-fud-04.jpg/" alt=\"What is FUD: Profit.\" width=\"1000\" height=\"495\" /></p>\n<p>Here&rsquo;s a more prominent example of how one man got accused of market manipulation. &nbsp;In May 2021, <strong>Elon Musk tweeted that Tesla would no longer accept Bitcoin as payment</strong> <strong>for its products</strong>. Of course, this caused a lot of panic among investors, which resulted in <a href=https://www.bitdegree.org/"/cryptocurrency-prices/bitcoin-btc-price/">the price of Bitcoin</a> falling by over 10% in less than a day.</p>\n<p>For doing so, he got accused of market manipulation. Of course, he knew that a tweet like this would result in Bitcoin&rsquo;s price taking a hit. And you can be sure that there were traders who saw this tweet as an opportunity to buy Bitcoin with a discount, as they were sure that many people would begin panic-selling their crypto holdings.</p>\n<h2>How to See Through FUD?</h2>\n<p>Up until this point, I&rsquo;ve explained that <strong>FUD may be caused by</strong>:</p>\n<ul class=\"pros-check\">\n<li>Information that eventually turns out to be true;</li>\n<li>Rumors that are not true;</li>\n<li>Rumors that are purposefully spread in order to cause panic and chaos in the market, so that market manipulators could profit from everyone&rsquo;s losses.</li>\n</ul>\n<p>It&rsquo;s obvious that this market is very much affected by emotions, especially negative ones. One of the main reasons for that is the fact that <strong>social media plays a very important role in the crypto industry</strong>.</p>\n<p>As new coins, technologies, updates, and opinions are minted on a daily basis, people need to stay in touch with all the latest developments within the industry, in order not to miss out or sleep on new investment opportunities.</p>\n<p>But, as always, it&rsquo;s a double-edged sword. <strong>Overly-intense reliance on social media gets weaponized by those who profit from FUD</strong>. Social media enables rumors and negative information to spread quickly. Therefore, in order to stay sane and safe in the crypto sphere, it is of utmost importance to always remain critical, and avoid blindly jumping on hype, fear, or other emotion-based bandwagons.</p>\n<p>Thankfully, there are helpful tools that can help traders check the emotional climate in the market. The most famous one is called the &ldquo;<strong><a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-fear-and-greed-index/">Crypto Fear &amp; Greed Index</a></strong>.&rdquo;</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is FUD: Crypto Fear &amp; Greed Index.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what-is-fud-05.jpg/" alt=\"What is FUD: Crypto Fear &amp; Greed Index.\" width=\"1000\" height=\"622\" /></p>\n<p>By analyzing and measuring the prevailing emotions in the market, this index expresses how does the market feel at a given day on a scale from 0 to 100.</p>\n<p><strong>0 represents &ldquo;Extreme fear&rdquo;, while the highest number -</strong> <strong>100 - represents &ldquo;Extreme greed.&rdquo;</strong></p>\n<p>Logically, when FUD is all over the place, the index turns red, and the number will get lower. So, when someone begins panicking a bit too much, they can take a look at this index, and get a reality check about how severe the situation truly is. <strong>The index serves a simple purpose, and its to help people deal with their emotions and not to overreact</strong>.&nbsp;</p>\n<p>If you want to take a look at how does the market feel like today, you can see it at <a href=https://www.bitdegree.org/"https://www.bitdegree.org/cryptocurrency-prices/fear-and-greed-index/">Bitdegree.org, where you&rsquo;ll find a daily-updated crypto fear &amp; greed index.</p>\n<p>Nevertheless, life would be too easy if a simple index could help people avoid losses, or lead directly to gains. Sometimes, colossal changes happen super fast, and relying simply on indexes like this one could be very risky to your financial well-being.</p>\n<p>There&rsquo;s something else that experienced traders would recommend to anyone who&rsquo;s worried about being affected by FUD too much. It&rsquo;s called <strong>diversifying your portfolio</strong>. It&rsquo;s a simple investment strategy that improves your resilience when the FUD clouds begin rising.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is FUD: Diversifying your portfolio.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what-is-fud-06.jpg/" alt=\"What is FUD: Diversifying your portfolio.\" width=\"1000\" height=\"610\" /></p>\n<p>If the market sentiment turns negative, and it affects a particular coin, traders better hope that this wasn&rsquo;t the coin that they put all their savings into. It&rsquo;s a crypto version of the old, wise saying that tells us <em>&ldquo;not to put all the eggs into &nbsp;a single basket.&rdquo; </em>If one coin gets affected by FUD, other coins may be able to avoid it. <strong>Having a diversified portfolio is the best way of ensuring that a single rumor won&rsquo;t take down someone&rsquo;s entire financial well-being</strong>.</p>\n<p>And finally, anyone who enters crypto has to realize that many projects, especially the real, promising ones, are here for the long term. After conducting their own, personal due diligence procedures, traders must evaluate that truly potential projects will survive FUD caused by false, or easily-deniable rumors.</p>\n<p>In cases like this, once again, <strong>FUD creates new investment opportunities</strong>. When negative news causes a particular crypto coin&rsquo;s price to drop, this may turn out to be a great opportunity to <em>&ldquo;buy the dip&rdquo;.</em> This expression translates to buying the coin at a lower price, and potentially profiting from it when the asset makes a comeback.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is FUD: Trader.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what-is-fud-07.jpg/" alt=\"What is FUD: Trader.\" width=\"1000\" height=\"554\" /></p>\n<p>And in addition to that, <strong>many FUD occurrences could be defined as short-lived</strong>. The crypto space, be it the market itself, or the crypto social media bubbles, are hyper volatile. New discussions, accusations, ideas, and conflicts occur every minute. New rumors are being created every day, and most of them get forgotten very quickly.</p>\n<p>Therefore, <strong>calm and patient traders recognize attempts at causing FUD</strong>, and don&rsquo;t let themselves be bothered by these efforts at catching your attention.</p>\n<h2>Wrapping Up</h2>\n<p>In this section, I&rsquo;ve covered <strong>what is FUD in investing, from a crypto perspective,&nbsp;in what forms it appears, and how it can affect the crypto market</strong>. Quite naturally, recognizing FUD and being able to not let it get into your head is a must for every trader who wishes to see success in their trading ventures.</p>\n<p>Understanding what causes FUD, and that it can be an artificially created chaos that market manipulators could take advantage of, provides traders with a new perspective, and a new skill of being more suspicious &amp; less susceptible to emotions and irrational behavior. And that&rsquo;s definitely something that a trader should seek to obtain.</p>\n<p>I hope that from now on, you&rsquo;ll recognize FUD, and the fear of asking the question <em>&ldquo;what is FUD?&rdquo;</em> won&rsquo;t bother you anymore.</p>","meta_title":"What is FUD and How Does It Affect the Crypto Market?","meta_description":"What is FUD? Well, the acronym stands for \"Fear, Uncertainty, and Doubt.\" Read this to find out how to benefit from FUD in crypto investing.","meta_keywords":"what is fud, what is a fud cycle, what is fud in investing","order":7,"language":"en","created_at":"2023-04-20T11:14:50.000000Z","updated_at":"2023-05-22T05:34:12.000000Z","modified_content":"<p><span style=\"font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, Oxygen, Ubuntu, Cantarell, 'Open Sans', 'Helvetica Neue', sans-serif;\">In this section, we&rsquo;re going to talk about <strong>what is FUD in investing, and how to profit from it</strong>!</span></p>\n<p>Ironically, the word <em>&ldquo;FUD&rdquo;</em> causes FUD for those who don&rsquo;t know what this abbreviation stands for, which is &ldquo;<strong>Fear, Uncertainty and Doubt</strong>&rdquo;. But, there&rsquo;s no need to fear FUD. You can even profit from it, and there are many who do exactly that.</p>\n<p>Emotions play a critical role in everything. Therefore, it&rsquo;s not a surprise that markets, especially ones that are as versatile as crypto, are directly affected by the predominant sentiments. But, once you become aware of how it influences people&rsquo;s financial decisions, you learn how to read between the lines, and how to avoid being blinded by irrational fear.</p>\n<p>In this section, <strong>I&rsquo;m going to talk about what is FUD in crypto investing</strong> - specifically, how it affects people&rsquo;s investment strategies and the cryptocurrency market, and how not to give into it. I&rsquo;ll share particular examples about how FUD had led people into financial losses, and the exact opposite - how smart investors sensed the market sentiment, and ended up counting financial gains while everyone else thought that the ship was sinking.</p>\n<p><em>Fear no more, and let&rsquo;s dive into it!</em></p>\n<div class=\"container\">\n <div class=\"row justify-content-center\">\n <div class=\"col-md-10 comparison-suggestion pb-3 mb-4\">\n <div class=\"d-flex flex-row\">\n <div class=\"text-center\">\n <div class=\"img-block-yt\">\n <img src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/assets/images/compare-crypto-exchanges.gif/"/n alt=\"What is FUD in Crypto? (Fear, Uncertainty &amp; Doubt Explained)\"\n title=\"What is FUD in Crypto? (Fear, Uncertainty &amp; Doubt Explained)\" class=\"border-0\">\n <p>Video Explainer</p>\n </div>\n </div>\n <div class=\"col-xs-10 col-sm-10 col-md-10 text-left py-3 yt-info\">\n <h4 class=\"mb-1\">Video Explainer: What is FUD: How to Use It to Your Advantage While Investing in Crypto?</h4>\n <p class=\"py-1 mb-0 youtube-video-subtitle\">Reading is not your thing? Watch the \"What is FUD: How to Use It to Your Advantage While Investing in Crypto?\" video explainer</p>\n </div>\n </div>\n <div class=\"row justify-content-center text-center\">\n <div class=\"col-12 col-md-11 px-3\">\n <div class=\"wrapper mb-0\">\n <div class=\"youtube mb-4 bg-transparent p-0 video-modal-popup\" data-toggle=\"modal\"\n data-target=\"#video-modal\" data-id=\"_9iJ4tlM3LU\" data-title=\"CryptoFinallyExplained\">\n <div class=\"video-gradient-top\"></div>\n <p class=\"text-left dyk-video-title\">What is FUD in Crypto? (Fear, Uncertainty &amp; Doubt Explained)</p>\n <img src=https://www.bitdegree.org/"https://i.ytimg.com/vi/_9iJ4tlM3LU/hq720.jpg/"/n alt=\"What is FUD in Crypto? (Fear, Uncertainty &amp; Doubt Explained)\"\n title=\"What is FUD in Crypto? (Fear, Uncertainty &amp; Doubt Explained)\"\n class=\"p-0\">\n <img class=\"play-button\" data-target=\"#video-modal\"\n src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/assets/video-button.png/"/n alt=\"What is FUD in Crypto? (Fear, Uncertainty &amp; Doubt Explained)\">\n </div>\n </div>\n </div>\n </div>\n <div class=\"row justify-content-center text-center\">\n <div>\n <a href=https://www.bitdegree.org/"https://www.youtube.com/c/CryptoFinallyExplained?sub_confirmation=1\%22\n class=\"btn yt-promo mb-2\" target=\"_blank\" rel=\"nofollow noopener\">\n <div class=\"row justify-content-center align-items-center mx-0 text-center\">\n <div class=\"col-4 col-md-4\">\n <i class=\"fab fa-youtube yt-dyk-btn\"></i>\n </div>\n <div class=\"col-8 col-md-8 text-center yt-promo-text\">\n <h4 class=\"m-0 text-white\">SUBSCRIBE</h4>\n <span>ON YOUTUBE</span>\n </div>\n </div>\n </a>\n </div>\n </div>\n </div>\n </div>\n</div>\n<div class=\"modal fade\" id=\"video-modal\" tabindex=\"-1\" role=\"dialog\" aria-labelledby=\"_9iJ4tlM3LU\">\n <div class=\"modal-dialog modal-dialog-centered modal-lg\" role=\"document\">\n <div class=\"modal-content\">\n <div class=\"modal-body p-0\">\n <button type=\"button\" class=\"video-modal-close close\" data-dismiss=\"modal\" aria-label=\"Close\">\n <i aria-hidden=\"true\" class=\"fas fa-times\"></i>\n </button>\n <div id=\"iframe\"></div>\n </div>\n <a class=\"text-decoration-none\"\n href=https://www.bitdegree.org/"https://www.youtube.com/c/CryptoFinallyExplained?sub_confirmation=1\%22\n rel=\"nofollow noopener\" target=\"_blank\">\n <div class=\"modal-footer p-0 d-block bg-white\">\n <div class=\"row justify-content-center m-0\">\n <div class=\"col-3 col-md-4 col-lg-2 p-0\">\n <img class=\"w-100 h-100\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/assets/crypto-subscribe.jpg/" alt=\"Subscribe\">\n </div>\n <div class=\"col-9 col-md-8 col-lg-2 px-0 d-flex\">\n <div class=\"modal-subscribe w-100\">\n <p class=\"m-0 mt-1 mr-3\">SUBSCRIBE<br>\n <span class=\"m-0\">ON YOUTUBE</span>\n </p>\n </div>\n </div>\n <div class=\"col-12 col-md-12 col-lg-8 p-0 text-center d-flex justify-content-center align-items-center\">\n <div class=\"modal-subscribe-text\">\n <h4 class=\"m-0\">Understand crypto with ease</h4>\n <span>New explainer videos every week!</span>\n </div>\n </div>\n </div>\n </div>\n </a>\n </div>\n </div>\n</div>\n<h2>What is FUD?</h2>\n<p>As I&rsquo;ve told you in the introductory part, <strong>FUD stands for Fear, Uncertainty, and Doubt</strong>. These three unpleasant emotions play a huge part in crypto, as well as the broader financial markets, in general. They affect how people act, what they buy, what they sell, where and how much they invest. When these emotions prevail, it affects the entire industry, and numbers on charts turn red.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is FUD: Fear, Uncertainty, and Doubt.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what-is-fud-01.jpg/" alt=\"What is FUD: Fear, Uncertainty, and Doubt.\" width=\"1000\" height=\"557\" /></p>\n<p>These sentiments arise and grip the market for various reasons, and on different occasions. <strong>Sometimes, FUD spreads uncontrollably</strong> for objective reasons, such as huge companies going bankrupt, or political bodies implementing policies that may potentially be detrimental to particular investments.</p>\n<p>A great example of this could be found in the year 2021. It was the time when the word began spreading that the <strong>Chinese government was about to implement a total ban on crypto</strong>. China was very active in terms of <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/tutorials/how-to-mine-cryptocurrency/">crypto mining</a> operations; therefore people feared that a sudden shock like this could give a massive blow to the industry. Which, of course, would affect crypto prices, and cause financial losses for most traders.</p>\n<p>Naturally, this news caused a wave of FUD in the crypto world, as investors and traders became concerned about saving their money. As time later revealed, the fears were justified, as China really did implement the crypto ban, and the effects on the market were felt by everyone.</p>\n<p>This was an example of <strong>FUD caused by unsettling rumors</strong> that eventually turned out to be true. But it&rsquo;s not always the case. In reality, usually, it&rsquo;s quite the opposite.</p>\n<p>Sometimes false rumors begin making rounds on social media, and if no respected figure steps in to deny them in time, the waves of FUD can cause real damage. And in cases like this, the damage comes from the fact that unverified information affected traders&rsquo; emotions, and they all gave in to fear, uncertainty and doubt.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is FUD: This rumor is false!\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what-is-fud-02.jpg/" alt=\"What is FUD: This rumor is false!\" width=\"1000\" height=\"589\" /></p>\n<p>Here&rsquo;s an example. Several months before the rumors about China&rsquo;s ban, in May 2021, the word began spreading that <strong>the US Treasury was planning to strictly intensify crypto regulation</strong>.</p>\n<p>FUD quickly spread, and led to a significant drop in the prices of such cryptocurrencies as <a href=https://www.bitdegree.org/"/crypto/buy-bitcoin-btc/">Bitcoin and <a href=https://www.bitdegree.org/"/crypto/buy-ethereum-eth/">Ethereum. &nbsp;As the prices began falling, people began panicking. In order to save their investments, many traders rushed to sell their crypto assets, which, in turn, only further accelerated the spread of the unpleasant sentiment and the decline in crypto prices. Even though all of this was caused by a false rumor, it created a vicious circle, and a snowball effect.</p>\n<p>So, that&rsquo;s an example of how false news and fake information can cause FUD. As you can already tell, <strong>when it comes to FUD, a savvy investor must always remain sharp and vigilant</strong> in order not to fall prey to rumors taken out of thin air.</p>\n<p>There are a lot of similarities between how rumors function in the crypto market, and in real life. Sometimes they turn out to be true, sometimes, they get debunked as pure nonsense. But, there&rsquo;s one more element that needs to be considered when talking about what is FUD in crypto investing. Just like gossip, <strong>FUD is often created by people who have particular goals in their minds</strong>. <em>And these goals can get pretty sinister.</em></p>\n<p>Market manipulators or competitors of a particular cryptocurrency, or a crypto-related company, love FUD. If the rumor doesn&rsquo;t get debunked fast enough, the coin, or a company that's surrounded by artificially-caused clouds of FUD can get damaged.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is FUD: Market manipulators.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what-is-fud-03.jpg/" alt=\"What is FUD: Market manipulators.\" width=\"1000\" height=\"600\" /></p>\n<p>As mentioned before, <strong>FUD causes panic-selling</strong>, as traders try not to lose their investments. So, if the FUD is targeted at a particular coin, it can lead to a significant drop in its price. If the FUD doesn&rsquo;t get dispersed quick enough, it can lead to a loss of confidence in the coin, the company, or even the entire industry, as people begin to literally feel fearful, uncertain and doubtful about continuing to invest their money into it.</p>\n<p>But then again, where there are losers, there are also winners. Market manipulators understand this very well, and every time they notice an irrational behavior becoming more and more prevalent in the market, they begin sensing new opportunities.</p>\n<p><strong>If the rumor is false, it will eventually get debunked, the FUD cycle will come to an end</strong>. But until then, the artificially created FUD does its job for them.</p>\n<p>If people began abandoning a certain coin, it would lead to its decrease in value. This opens up opportunities for market manipulators to rush in, buy this coin at a lower value, and then, once it gets back on its feet, sell it at a higher price than they bought it for.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is FUD: Profit.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what-is-fud-04.jpg/" alt=\"What is FUD: Profit.\" width=\"1000\" height=\"495\" /></p>\n<p>Here&rsquo;s a more prominent example of how one man got accused of market manipulation. &nbsp;In May 2021, <strong>Elon Musk tweeted that Tesla would no longer accept Bitcoin as payment</strong> <strong>for its products</strong>. Of course, this caused a lot of panic among investors, which resulted in <a href=https://www.bitdegree.org/"/cryptocurrency-prices/bitcoin-btc-price/">the price of Bitcoin</a> falling by over 10% in less than a day.</p>\n<p>For doing so, he got accused of market manipulation. Of course, he knew that a tweet like this would result in Bitcoin&rsquo;s price taking a hit. And you can be sure that there were traders who saw this tweet as an opportunity to buy Bitcoin with a discount, as they were sure that many people would begin panic-selling their crypto holdings.</p>\n<h2>How to See Through FUD?</h2>\n<p>Up until this point, I&rsquo;ve explained that <strong>FUD may be caused by</strong>:</p>\n<ul class=\"pros-check\">\n<li>Information that eventually turns out to be true;</li>\n<li>Rumors that are not true;</li>\n<li>Rumors that are purposefully spread in order to cause panic and chaos in the market, so that market manipulators could profit from everyone&rsquo;s losses.</li>\n</ul>\n<p>It&rsquo;s obvious that this market is very much affected by emotions, especially negative ones. One of the main reasons for that is the fact that <strong>social media plays a very important role in the crypto industry</strong>.</p>\n<p>As new coins, technologies, updates, and opinions are minted on a daily basis, people need to stay in touch with all the latest developments within the industry, in order not to miss out or sleep on new investment opportunities.</p>\n<p>But, as always, it&rsquo;s a double-edged sword. <strong>Overly-intense reliance on social media gets weaponized by those who profit from FUD</strong>. Social media enables rumors and negative information to spread quickly. Therefore, in order to stay sane and safe in the crypto sphere, it is of utmost importance to always remain critical, and avoid blindly jumping on hype, fear, or other emotion-based bandwagons.</p>\n<p>Thankfully, there are helpful tools that can help traders check the emotional climate in the market. The most famous one is called the &ldquo;<strong><a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-fear-and-greed-index/">Crypto Fear &amp; Greed Index</a></strong>.&rdquo;</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is FUD: Crypto Fear &amp; Greed Index.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what-is-fud-05.jpg/" alt=\"What is FUD: Crypto Fear &amp; Greed Index.\" width=\"1000\" height=\"622\" /></p>\n<p>By analyzing and measuring the prevailing emotions in the market, this index expresses how does the market feel at a given day on a scale from 0 to 100.</p>\n<p><strong>0 represents &ldquo;Extreme fear&rdquo;, while the highest number -</strong> <strong>100 - represents &ldquo;Extreme greed.&rdquo;</strong></p>\n<p>Logically, when FUD is all over the place, the index turns red, and the number will get lower. So, when someone begins panicking a bit too much, they can take a look at this index, and get a reality check about how severe the situation truly is. <strong>The index serves a simple purpose, and its to help people deal with their emotions and not to overreact</strong>.&nbsp;</p>\n<p>If you want to take a look at how does the market feel like today, you can see it at <a href=https://www.bitdegree.org/"https://www.bitdegree.org/cryptocurrency-prices/fear-and-greed-index/">Bitdegree.org, where you&rsquo;ll find a daily-updated crypto fear &amp; greed index.</p>\n<p>Nevertheless, life would be too easy if a simple index could help people avoid losses, or lead directly to gains. Sometimes, colossal changes happen super fast, and relying simply on indexes like this one could be very risky to your financial well-being.</p>\n<p>There&rsquo;s something else that experienced traders would recommend to anyone who&rsquo;s worried about being affected by FUD too much. It&rsquo;s called <strong>diversifying your portfolio</strong>. It&rsquo;s a simple investment strategy that improves your resilience when the FUD clouds begin rising.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is FUD: Diversifying your portfolio.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what-is-fud-06.jpg/" alt=\"What is FUD: Diversifying your portfolio.\" width=\"1000\" height=\"610\" /></p>\n<p>If the market sentiment turns negative, and it affects a particular coin, traders better hope that this wasn&rsquo;t the coin that they put all their savings into. It&rsquo;s a crypto version of the old, wise saying that tells us <em>&ldquo;not to put all the eggs into &nbsp;a single basket.&rdquo; </em>If one coin gets affected by FUD, other coins may be able to avoid it. <strong>Having a diversified portfolio is the best way of ensuring that a single rumor won&rsquo;t take down someone&rsquo;s entire financial well-being</strong>.</p>\n<p>And finally, anyone who enters crypto has to realize that many projects, especially the real, promising ones, are here for the long term. After conducting their own, personal due diligence procedures, traders must evaluate that truly potential projects will survive FUD caused by false, or easily-deniable rumors.</p>\n<p>In cases like this, once again, <strong>FUD creates new investment opportunities</strong>. When negative news causes a particular crypto coin&rsquo;s price to drop, this may turn out to be a great opportunity to <em>&ldquo;buy the dip&rdquo;.</em> This expression translates to buying the coin at a lower price, and potentially profiting from it when the asset makes a comeback.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is FUD: Trader.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what-is-fud-07.jpg/" alt=\"What is FUD: Trader.\" width=\"1000\" height=\"554\" /></p>\n<p>And in addition to that, <strong>many FUD occurrences could be defined as short-lived</strong>. The crypto space, be it the market itself, or the crypto social media bubbles, are hyper volatile. New discussions, accusations, ideas, and conflicts occur every minute. New rumors are being created every day, and most of them get forgotten very quickly.</p>\n<p>Therefore, <strong>calm and patient traders recognize attempts at causing FUD</strong>, and don&rsquo;t let themselves be bothered by these efforts at catching your attention.</p>\n<h2>Wrapping Up</h2>\n<p>In this section, I&rsquo;ve covered <strong>what is FUD in investing, from a crypto perspective,&nbsp;in what forms it appears, and how it can affect the crypto market</strong>. Quite naturally, recognizing FUD and being able to not let it get into your head is a must for every trader who wishes to see success in their trading ventures.</p>\n<p>Understanding what causes FUD, and that it can be an artificially created chaos that market manipulators could take advantage of, provides traders with a new perspective, and a new skill of being more suspicious &amp; less susceptible to emotions and irrational behavior. And that&rsquo;s definitely something that a trader should seek to obtain.</p>\n<p>I hope that from now on, you&rsquo;ll recognize FUD, and the fear of asking the question <em>&ldquo;what is FUD?&rdquo;</em> won&rsquo;t bother you anymore.</p>","preview_url":"https://www.bitdegree.org/crypto/learn/what-is-fud","youtube_video":{"id":153,"channel_id":1,"sort":1,"video_title":"What is FUD in Crypto? (Fear, Uncertainty & Doubt Explained)","description":"What is FUD in crypto & how to see through it?\n\n\"FUD\" stands for \"Fear, Uncertainty, Doubt.\" These emotions play a crucial role in crypto. But those who understand them, and understand how emotional and irrational some traders can become, know how to profit from FUD.\n\nIn this video, you'll learn what is FUD in investing (crypto), how to recognize it, and how to avoid FUD getting into your head. I'll explain what can cause FUD, what are the different types of FUD, and how traders learn how to deal with it.\n\nHave you, personally, ever experienced FUD? Have you ever noticed attempts at creating FUD? If you have any insights, or examples, be sure to share them with everyone else in the comment section below!\n\nTo scan the current market sentiment, you can find the Crypto Fear & Greed Index right here: https://www.bitdegree.org/cryptocurrency-prices/fear-and-greed-index\n\nVideo Time Table:\n\n0:00 Introduction to What is FUD in Crypto\n1:15 What is FUD?\n5:14 Real-life FUD Example\n5:48 How to See Through FUD?\n9:27 Wrap-up: What is FUD in Crypto?\n\nGet Quick Crypto Tips on Twitter - Follow:\nhttps://twitter.com/crypto_xplained\n\n#WhatisFUD #FUDCrypto #FearAndGreed","video_id":"_9iJ4tlM3LU","duration":620,"view_count":48,"thumbnail_url":"https://i.ytimg.com/vi/_9iJ4tlM3LU/hq720.jpg","thumbnail_width":1280,"thumbnail_height":720,"published_at":"2023-05-19 14:45:42","created_at":"2023-05-19T23:00:03.000000Z","updated_at":"2023-05-21T23:00:04.000000Z","channel":{"id":1,"title":"CryptoFinallyExplained","channel_id":"UCOryUY0yxC08eJtK23mNgiA","main_playlist_id":"UUOryUY0yxC08eJtK23mNgiA"}}},"prevSection":{"id":22,"featured_image_id":6542,"original_id":null,"youtube_video_id":22,"author_id":42,"translator_id":null,"chapter_id":7,"title":"How to Get Free Crypto Assets?","slug":"how-to-get-free-crypto","definition":"Did you know that you can earn free crypto by simply running a program on your computer?","status":"published","content":"<p>In this section, I&rsquo;m going to tell you <strong>9 effective ways</strong> of how to get free crypto!</p>\n<p>Yes, believe it or not, getting some free crypto is actually possible! With the increase in popularity that the crypto world has experienced, many people believe that anyone who offers free cryptocurrencies is a scammer.</p>\n<p>While <strong>there are many scammers out there</strong>, yes, there are also legitimate ways of how you can get free <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/buy-bitcoin-btc/">Bitcoin, <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/buy-ethereum-eth/">Ethereum, and various other cryptocurrencies. That&rsquo;s what I&rsquo;m here to help you distinguish, in the first place!</p>\n<p>In this section, I&rsquo;ll tell you about 9 of the most popular and effective ways of how to get free crypto. Each method is going to be unique and is likely to suit different individuals, so make sure to stick around till the end!</p>\n<p><em>Let&rsquo;s get to it!</em></p>\n<h2>Coinbase and Binance</h2>\n<p>The first method of how you can get free crypto involves <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/goon/coinbase/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Coinbase</strong></a> <strong>and</strong> <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/goon/binance/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Binance</strong></a>. These are the two top-rated and biggest <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/best-cryptocurrency-exchange/">cryptocurrency exchange platforms</strong></a> in the industry.</p>\n<p>Don&rsquo;t worry, you won&rsquo;t need to trade cryptocurrencies. Instead, all that you&rsquo;ll need to do is learn about crypto. In other words, you will <strong>get free crypto for learning!</strong> <em>How cool is that?!</em></p>\n<p><em><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto-1.o.jpg/" alt=\"How to get free crypto: Coinbase and Binance.\" width=\"1000\" height=\"552\" /></em></p>\n<p>Both Binance and Coinbase have special programs that revolve around users learning about blockchain technology and cryptocurrencies, in general. As you study the material, you will passively earn crypto, straight into your accounts.</p>\n<p>This method is awesome simply because you don&rsquo;t need to buy anything, or spend any of your own <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-coin/">crypto coins</strong></a> or <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-token/">tokens. Instead, all that you need to do is create an account on either Coinbase or Binance <em>(or both, actually!)</em> and start learning!</p>\n<p>By the end of every subject, you&rsquo;ll be presented with a quiz. If you manage to answer the quiz correctly, you&rsquo;ll be credited with some crypto.</p>\n<h2>Crypto Mining</h2>\n<p>The second method of how you can start earning free crypto is by <strong><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-mining/">mining cryptocurrencies</a>! </strong>Cryptocurrency mining is a process that allows you to earn crypto by <strong>employing your computer to verify transactions</strong> happening on the blockchain network.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto-2.o.jpg/" alt=\"How to get free crypto: Crypto mining.\" width=\"1000\" height=\"894\" /></p>\n<p>Mining is a great way to earn free crypto simply because you don&rsquo;t need anything but your computer to get started! You can run a mining program at night, or during the days when you don&rsquo;t use your computer, and it will generate a passive yield of crypto!</p>\n<p>The most popular coin to mine is <strong>Ethereum</strong>, and your monthly gains will depend on a lot of different factors - your PC, the price fluctuations of ETH, the cost of electricity, and so on. However, Ethereum will eventually transition to a different governance protocol, which will make it impossible to be mined!</p>\n<p>Thus, if you plan to mine crypto for a long time, and maybe even want to invest in the process with some dedicated mining machines, you should definitely look into mining some other cryptocurrencies, too! Either way, it&rsquo;s definitely <strong>one of the best ways</strong> to earn crypto for free.</p>\n<h2>Airdrops</h2>\n<p>Number three is <strong><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-airdrop/">airdrops. If you&rsquo;re not familiar with the term, airdrops happen when developers of some sort of a project &ldquo;drop&rdquo; some of the project tokens into the wallets of individuals who use their platform.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto-3.o.jpg/" alt=\"How to get free crypto: Airdrops.\" width=\"1000\" height=\"417\" /></p>\n<p>The best-known example of a successful airdrop is <strong>Uniswap.</strong> When the UNI token launched, Uniswap airdropped these tokens to people who have used their <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-decentralized-exchange-dex/">decentralized crypto exchange</strong></a> application, up to that point in time. The lucky individuals who received the airdrop got 400 UNI tokens, each - as of writing this section, that&rsquo;s worth more than $4000!</p>\n<p>Getting yourself an airdrop is usually very simple. There are lists and calendars out there, that will show you the exact dates when certain airdrops will happen, as well as what you&rsquo;ll need to do in order to become eligible for one of the drops. In most cases, you&rsquo;ll simply need to share the project on social media, but sometimes, you might be required to actually use the platform, too.</p>\n<p>If you&rsquo;re looking to get some free crypto, though, this is <strong>a tried-and-true method!</strong></p>\n<h2>Staking &amp; Yield Farming</h2>\n<p>Number 4 method of earning free crypto is <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-staking/">staking and <strong><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-yield-farming/">yield farming</a>.</strong> I&rsquo;ve decided to combine these processes into one point, since, in many cases, they are going to look very similar, especially for crypto industry newcomers.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto-4.o.jpg/" alt=\"How to get free crypto: Staking and yield farming.\" width=\"1000\" height=\"852\" /></p>\n<p><strong>Staking</strong> is a process of delegating your crypto coins to a specific <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-staking-pool/">staking pool</strong></a>, in order for your assets to help confirm the transactions happening on the blockchain. It&rsquo;s actually a really difficult process, beneath the surface - if you want to learn more, check out the section <strong>\"<a href=https://www.bitdegree.org/"/crypto/learn/what-is-staking-in-crypto/">What is Staking in Crypto?</a>\".</strong></p>\n<p><strong>Yield farming</strong>, on the other hand, looks kind of similar, for an outsider looking in - you have some crypto coins, and delegate them to a <strong><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-liquidity-pool/">liquidity pool</a>. </strong>The difference is that, with staking, your crypto confirms transactions, while yield farming allows you to earn free crypto by providing your current assets to boost market liquidity, for a set amount of time.</p>\n<p>Though the processes are much more complex than that, but that&rsquo;s the general idea behind it.</p>\n<p>Now, in order to get free crypto from staking or yield farming, you will need to hold some coins, first. The most popular coins to stake include <strong>ADA, ALGO, ATOM, and others. </strong>Once you have some coins, you then need to find a staking or liquidity pool, and start earning free crypto! A simple google search should reveal a lot of different pool options. However, always do proper research - not all pools are established and fair!</p>\n<p>The best approach here is this - <strong>if it sounds too good to be true, it likely is!</strong></p>\n<h2>Faucets</h2>\n<p>Number 5 method for earning free crypto is <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-faucet/">cryptocurrency </a><strong><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-faucet/">faucets. Bitcoin faucets are as old as the cryptocurrency world itself! Faucets have been around forever, and have become one of the most popular methods of how to get free crypto.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto-5.o.jpg/" alt=\"How to get free crypto: Crypto faucets.\" width=\"1000\" height=\"296\" /></p>\n<p>A cryptocurrency faucet is a special platform that allows you to earn very <strong>small amounts of crypto for doing certain tasks. </strong>You might be asked to complete captchas, solve puzzles, answer questionnaires, and so on. All of the tasks are going to be super-simple, and won&rsquo;t take long to complete.</p>\n<p>Now, I know what you might be thinking - what&rsquo;s the deal with these faucets? Why would anyone be paying people just to solve a simple captcha?</p>\n<p>Well, it&rsquo;s pretty simple, really! Different cryptocurrency platforms create faucets in order to spread awareness about their project and to help people get started. The small payments that you get from a crypto faucet could cover transactions fees, and help you start interacting with the platform itself.</p>\n<p>It&rsquo;s a <strong>legitimate and old-as-time method</strong> to start earning free crypto!</p>\n<h2>Crypto Debit Cards</h2>\n<p>Number 6 on our list are <strong><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-crypto-debit-card/">crypto debit cards</a>. </strong>Some certain cryptocurrency platforms, such as <strong>Binance and Crypto.com</strong>, have created and issued their own debit cards. These cards can be used in the same manner as any other debit card out there - you may perform purchases almost anywhere with them!</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto-6.o.jpg/" alt=\"How to get free crypto: Crypto debit cards.\" width=\"1000\" height=\"503\" /></p>\n<p>Both Binance and Crypto.com have reward programs - in other words, <strong>they will reward you for spending money</strong><strong>&nbsp;on certain things.</strong> These rewards come in the form of free crypto, credited directly into your account.</p>\n<p>So essentially, you will receive free cryptocurrencies simply for spending your money on certain purchases - the same thing that you would do either way! With both platforms being long-time crypto industry veterans, you can be sure that this is <strong>one of the more-effective and popular ways</strong> to earn free crypto.</p>\n<h2>Using Brave</h2>\n<p><strong>Brave is an internet browser. </strong>It&rsquo;s part of a decentralized project that aims to give the power of the internet back to the people.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto-7.o.jpg/" alt=\"How to get free crypto: Using Brave.\" width=\"1000\" height=\"652\" /></p>\n<p>Using Brave, you will be able to earn free crypto, in the form of <strong>Basic Attention Tokens. </strong>You&rsquo;ll receive them for doing just that - using the browser. There are no catches or small print involved!</p>\n<p>How can this be possible? Well, advertisers come to Brave and place their ads on the browser. In order to be able to do so, they pay with <strong>BAT tokens.</strong> Then, as those ads are displayed to you during your browsing session, you receive BAT for seeing them, so to speak.</p>\n<p>While using Brave won&rsquo;t make you rich, it&rsquo;s definitely <strong>a great way to get free crypto</strong>, without actively doing anything!</p>\n<h2>Friend Referrals</h2>\n<p>Number 8 on our list are friend referrals. Many high-profile cryptocurrency exchange platforms are going to have <strong>referral programs.</strong> So, you register on the exchange, and then receive a <strong>unique referral code.</strong></p>\n<p><strong><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto-8.o.jpg/" alt=\"How to get free crypto: Friend referrals.\" width=\"1000\" height=\"537\" /></strong></p>\n<p>Whenever you invite someone, and they register on the exchange with your code, you will receive certain benefits. Sometimes, these benefits include free crypto!</p>\n<p>It costs literally nothing to do so! This method of how to get free crypto is especially useful if you already have friends who are interested in cryptocurrencies, in general. They&rsquo;ll be able to join an exchange, and you&rsquo;ll be able to receive various benefits for inviting them - it&rsquo;s a win-win situation!</p>\n<h2>Reddit Moons</h2>\n<p>Now, the number 9 method of how to get free crypto is a bit of a curveball. It&rsquo;s not something that you&rsquo;ll come across often, yet is still considered to be an <strong>underrated approach to free crypto acquisition.</strong></p>\n<p><strong><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto-9.o.jpg/" alt=\"How to get free crypto: Reddit moons.\" width=\"1000\" height=\"562\" /></strong></p>\n<p>The most popular crypto subreddit called<strong> r/cryptocurrency </strong>has a native token associated with it - a token called <strong>MOON.</strong> Participants of the subreddit are able to earn MOONs for simply interacting with posts, writing comments, answering questions, and creating discussions, themselves.</p>\n<p>While MOONs aren&rsquo;t likely to make you rich, it&rsquo;s a really unique way to earn crypto, while being part of the largest cryptocurrency community online. Though keep in mind that &ldquo;MOON farming&rdquo; isn&rsquo;t allowed on this subreddit - if you want to get free crypto, you&rsquo;ll need to contribute to the conversation, and bring some value to the table!</p>\n<h2>Finishing Off</h2>\n<p>Lastly, I&rsquo;d like to stress that you can definitely use all of the methods of getting free crypto that I&rsquo;ve discussed in this section at the same time! This will compound your potential gains, and help you get more crypto over time.</p>","meta_title":"How to Get Free Crypto? 9 Effective Ways","meta_description":"Do you want to own crypto but don't want to buy it? Wondering how to get free crypto? Find 9 effective ways how to do that right here!","meta_keywords":"how to get free bitcoin, how to get free crypto, bitcoin for free, how to get free crypto on coinbase","order":5,"language":"en","created_at":"2022-05-04T07:31:58.000000Z","updated_at":"2023-04-24T13:41:44.000000Z","modified_content":"<p>In this section, I&rsquo;m going to tell you <strong>9 effective ways</strong> of how to get free crypto!</p>\n<p>Yes, believe it or not, getting some free crypto is actually possible! With the increase in popularity that the crypto world has experienced, many people believe that anyone who offers free cryptocurrencies is a scammer.</p>\n<p>While <strong>there are many scammers out there</strong>, yes, there are also legitimate ways of how you can get free <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/buy-bitcoin-btc/">Bitcoin, <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/buy-ethereum-eth/">Ethereum, and various other cryptocurrencies. That&rsquo;s what I&rsquo;m here to help you distinguish, in the first place!</p>\n<p>In this section, I&rsquo;ll tell you about 9 of the most popular and effective ways of how to get free crypto. Each method is going to be unique and is likely to suit different individuals, so make sure to stick around till the end!</p>\n<p><em>Let&rsquo;s get to it!</em></p>\n<div class=\"container\">\n <div class=\"row justify-content-center\">\n <div class=\"col-md-10 comparison-suggestion pb-3 mb-4\">\n <div class=\"d-flex flex-row\">\n <div class=\"text-center\">\n <div class=\"img-block-yt\">\n <img src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/assets/images/compare-crypto-exchanges.gif/"/n alt=\"How to Get Free Crypto? (Explained with Animations)\"\n title=\"How to Get Free Crypto? (Explained with Animations)\" class=\"border-0\">\n <p>Video Explainer</p>\n </div>\n </div>\n <div class=\"col-xs-10 col-sm-10 col-md-10 text-left py-3 yt-info\">\n <h4 class=\"mb-1\">Video Explainer: How to Get Free Crypto Assets?</h4>\n <p class=\"py-1 mb-0 youtube-video-subtitle\">Reading is not your thing? Watch the \"How to Get Free Crypto Assets?\" video explainer</p>\n </div>\n </div>\n <div class=\"row justify-content-center text-center\">\n <div class=\"col-12 col-md-11 px-3\">\n <div class=\"wrapper mb-0\">\n <div class=\"youtube mb-4 bg-transparent p-0 video-modal-popup\" data-toggle=\"modal\"\n data-target=\"#video-modal\" data-id=\"aNjehGx3WqM\" data-title=\"CryptoFinallyExplained\">\n <div class=\"video-gradient-top\"></div>\n <p class=\"text-left dyk-video-title\">How to Get Free Crypto? (Explained with Animations)</p>\n <img src=https://www.bitdegree.org/"https://i.ytimg.com/vi/aNjehGx3WqM/hq720.jpg/"/n alt=\"How to Get Free Crypto? (Explained with Animations)\"\n title=\"How to Get Free Crypto? (Explained with Animations)\"\n class=\"p-0\">\n <img class=\"play-button\" data-target=\"#video-modal\"\n src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/assets/video-button.png/"/n alt=\"How to Get Free Crypto? (Explained with Animations)\">\n </div>\n </div>\n </div>\n </div>\n <div class=\"row justify-content-center text-center\">\n <div>\n <a href=https://www.bitdegree.org/"https://www.youtube.com/c/CryptoFinallyExplained?sub_confirmation=1\%22\n class=\"btn yt-promo mb-2\" target=\"_blank\" rel=\"nofollow noopener\">\n <div class=\"row justify-content-center align-items-center mx-0 text-center\">\n <div class=\"col-4 col-md-4\">\n <i class=\"fab fa-youtube yt-dyk-btn\"></i>\n </div>\n <div class=\"col-8 col-md-8 text-center yt-promo-text\">\n <h4 class=\"m-0 text-white\">SUBSCRIBE</h4>\n <span>ON YOUTUBE</span>\n </div>\n </div>\n </a>\n </div>\n </div>\n </div>\n </div>\n</div>\n<div class=\"modal fade\" id=\"video-modal\" tabindex=\"-1\" role=\"dialog\" aria-labelledby=\"aNjehGx3WqM\">\n <div class=\"modal-dialog modal-dialog-centered modal-lg\" role=\"document\">\n <div class=\"modal-content\">\n <div class=\"modal-body p-0\">\n <button type=\"button\" class=\"video-modal-close close\" data-dismiss=\"modal\" aria-label=\"Close\">\n <i aria-hidden=\"true\" class=\"fas fa-times\"></i>\n </button>\n <div id=\"iframe\"></div>\n </div>\n <a class=\"text-decoration-none\"\n href=https://www.bitdegree.org/"https://www.youtube.com/c/CryptoFinallyExplained?sub_confirmation=1\%22\n rel=\"nofollow noopener\" target=\"_blank\">\n <div class=\"modal-footer p-0 d-block bg-white\">\n <div class=\"row justify-content-center m-0\">\n <div class=\"col-3 col-md-4 col-lg-2 p-0\">\n <img class=\"w-100 h-100\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/assets/crypto-subscribe.jpg/" alt=\"Subscribe\">\n </div>\n <div class=\"col-9 col-md-8 col-lg-2 px-0 d-flex\">\n <div class=\"modal-subscribe w-100\">\n <p class=\"m-0 mt-1 mr-3\">SUBSCRIBE<br>\n <span class=\"m-0\">ON YOUTUBE</span>\n </p>\n </div>\n </div>\n <div class=\"col-12 col-md-12 col-lg-8 p-0 text-center d-flex justify-content-center align-items-center\">\n <div class=\"modal-subscribe-text\">\n <h4 class=\"m-0\">Understand crypto with ease</h4>\n <span>New explainer videos every week!</span>\n </div>\n </div>\n </div>\n </div>\n </a>\n </div>\n </div>\n</div>\n<h2>Coinbase and Binance</h2>\n<p>The first method of how you can get free crypto involves <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/goon/coinbase/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Coinbase</strong></a> <strong>and</strong> <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/goon/binance/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Binance</strong></a>. These are the two top-rated and biggest <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/best-cryptocurrency-exchange/">cryptocurrency exchange platforms</strong></a> in the industry.</p>\n<p>Don&rsquo;t worry, you won&rsquo;t need to trade cryptocurrencies. Instead, all that you&rsquo;ll need to do is learn about crypto. In other words, you will <strong>get free crypto for learning!</strong> <em>How cool is that?!</em></p>\n<p><em><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto-1.o.jpg/" alt=\"How to get free crypto: Coinbase and Binance.\" width=\"1000\" height=\"552\" /></em></p>\n<p>Both Binance and Coinbase have special programs that revolve around users learning about blockchain technology and cryptocurrencies, in general. As you study the material, you will passively earn crypto, straight into your accounts.</p>\n<p>This method is awesome simply because you don&rsquo;t need to buy anything, or spend any of your own <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-coin/">crypto coins</strong></a> or <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-token/">tokens. Instead, all that you need to do is create an account on either Coinbase or Binance <em>(or both, actually!)</em> and start learning!</p>\n<p>By the end of every subject, you&rsquo;ll be presented with a quiz. If you manage to answer the quiz correctly, you&rsquo;ll be credited with some crypto.</p>\n<h2>Crypto Mining</h2>\n<p>The second method of how you can start earning free crypto is by <strong><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-mining/">mining cryptocurrencies</a>! </strong>Cryptocurrency mining is a process that allows you to earn crypto by <strong>employing your computer to verify transactions</strong> happening on the blockchain network.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto-2.o.jpg/" alt=\"How to get free crypto: Crypto mining.\" width=\"1000\" height=\"894\" /></p>\n<p>Mining is a great way to earn free crypto simply because you don&rsquo;t need anything but your computer to get started! You can run a mining program at night, or during the days when you don&rsquo;t use your computer, and it will generate a passive yield of crypto!</p>\n<p>The most popular coin to mine is <strong>Ethereum</strong>, and your monthly gains will depend on a lot of different factors - your PC, the price fluctuations of ETH, the cost of electricity, and so on. However, Ethereum will eventually transition to a different governance protocol, which will make it impossible to be mined!</p>\n<p>Thus, if you plan to mine crypto for a long time, and maybe even want to invest in the process with some dedicated mining machines, you should definitely look into mining some other cryptocurrencies, too! Either way, it&rsquo;s definitely <strong>one of the best ways</strong> to earn crypto for free.</p>\n<h2>Airdrops</h2>\n<p>Number three is <strong><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-airdrop/">airdrops. If you&rsquo;re not familiar with the term, airdrops happen when developers of some sort of a project &ldquo;drop&rdquo; some of the project tokens into the wallets of individuals who use their platform.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto-3.o.jpg/" alt=\"How to get free crypto: Airdrops.\" width=\"1000\" height=\"417\" /></p>\n<p>The best-known example of a successful airdrop is <strong>Uniswap.</strong> When the UNI token launched, Uniswap airdropped these tokens to people who have used their <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-decentralized-exchange-dex/">decentralized crypto exchange</strong></a> application, up to that point in time. The lucky individuals who received the airdrop got 400 UNI tokens, each - as of writing this section, that&rsquo;s worth more than $4000!</p>\n<p>Getting yourself an airdrop is usually very simple. There are lists and calendars out there, that will show you the exact dates when certain airdrops will happen, as well as what you&rsquo;ll need to do in order to become eligible for one of the drops. In most cases, you&rsquo;ll simply need to share the project on social media, but sometimes, you might be required to actually use the platform, too.</p>\n<p>If you&rsquo;re looking to get some free crypto, though, this is <strong>a tried-and-true method!</strong></p>\n<h2>Staking &amp; Yield Farming</h2>\n<p>Number 4 method of earning free crypto is <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-staking/">staking and <strong><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-yield-farming/">yield farming</a>.</strong> I&rsquo;ve decided to combine these processes into one point, since, in many cases, they are going to look very similar, especially for crypto industry newcomers.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto-4.o.jpg/" alt=\"How to get free crypto: Staking and yield farming.\" width=\"1000\" height=\"852\" /></p>\n<p><strong>Staking</strong> is a process of delegating your crypto coins to a specific <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-staking-pool/">staking pool</strong></a>, in order for your assets to help confirm the transactions happening on the blockchain. It&rsquo;s actually a really difficult process, beneath the surface - if you want to learn more, check out the section <strong>\"<a href=https://www.bitdegree.org/"/crypto/learn/what-is-staking-in-crypto/">What is Staking in Crypto?</a>\".</strong></p>\n<p><strong>Yield farming</strong>, on the other hand, looks kind of similar, for an outsider looking in - you have some crypto coins, and delegate them to a <strong><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-liquidity-pool/">liquidity pool</a>. </strong>The difference is that, with staking, your crypto confirms transactions, while yield farming allows you to earn free crypto by providing your current assets to boost market liquidity, for a set amount of time.</p>\n<p>Though the processes are much more complex than that, but that&rsquo;s the general idea behind it.</p>\n<p>Now, in order to get free crypto from staking or yield farming, you will need to hold some coins, first. The most popular coins to stake include <strong>ADA, ALGO, ATOM, and others. </strong>Once you have some coins, you then need to find a staking or liquidity pool, and start earning free crypto! A simple google search should reveal a lot of different pool options. However, always do proper research - not all pools are established and fair!</p>\n<p>The best approach here is this - <strong>if it sounds too good to be true, it likely is!</strong></p>\n<h2>Faucets</h2>\n<p>Number 5 method for earning free crypto is <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-faucet/">cryptocurrency </a><strong><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-faucet/">faucets. Bitcoin faucets are as old as the cryptocurrency world itself! Faucets have been around forever, and have become one of the most popular methods of how to get free crypto.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto-5.o.jpg/" alt=\"How to get free crypto: Crypto faucets.\" width=\"1000\" height=\"296\" /></p>\n<p>A cryptocurrency faucet is a special platform that allows you to earn very <strong>small amounts of crypto for doing certain tasks. </strong>You might be asked to complete captchas, solve puzzles, answer questionnaires, and so on. All of the tasks are going to be super-simple, and won&rsquo;t take long to complete.</p>\n<p>Now, I know what you might be thinking - what&rsquo;s the deal with these faucets? Why would anyone be paying people just to solve a simple captcha?</p>\n<p>Well, it&rsquo;s pretty simple, really! Different cryptocurrency platforms create faucets in order to spread awareness about their project and to help people get started. The small payments that you get from a crypto faucet could cover transactions fees, and help you start interacting with the platform itself.</p>\n<p>It&rsquo;s a <strong>legitimate and old-as-time method</strong> to start earning free crypto!</p>\n<h2>Crypto Debit Cards</h2>\n<p>Number 6 on our list are <strong><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-crypto-debit-card/">crypto debit cards</a>. </strong>Some certain cryptocurrency platforms, such as <strong>Binance and Crypto.com</strong>, have created and issued their own debit cards. These cards can be used in the same manner as any other debit card out there - you may perform purchases almost anywhere with them!</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto-6.o.jpg/" alt=\"How to get free crypto: Crypto debit cards.\" width=\"1000\" height=\"503\" /></p>\n<p>Both Binance and Crypto.com have reward programs - in other words, <strong>they will reward you for spending money</strong><strong>&nbsp;on certain things.</strong> These rewards come in the form of free crypto, credited directly into your account.</p>\n<p>So essentially, you will receive free cryptocurrencies simply for spending your money on certain purchases - the same thing that you would do either way! With both platforms being long-time crypto industry veterans, you can be sure that this is <strong>one of the more-effective and popular ways</strong> to earn free crypto.</p>\n<h2>Using Brave</h2>\n<p><strong>Brave is an internet browser. </strong>It&rsquo;s part of a decentralized project that aims to give the power of the internet back to the people.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto-7.o.jpg/" alt=\"How to get free crypto: Using Brave.\" width=\"1000\" height=\"652\" /></p>\n<p>Using Brave, you will be able to earn free crypto, in the form of <strong>Basic Attention Tokens. </strong>You&rsquo;ll receive them for doing just that - using the browser. There are no catches or small print involved!</p>\n<p>How can this be possible? Well, advertisers come to Brave and place their ads on the browser. In order to be able to do so, they pay with <strong>BAT tokens.</strong> Then, as those ads are displayed to you during your browsing session, you receive BAT for seeing them, so to speak.</p>\n<p>While using Brave won&rsquo;t make you rich, it&rsquo;s definitely <strong>a great way to get free crypto</strong>, without actively doing anything!</p>\n<h2>Friend Referrals</h2>\n<p>Number 8 on our list are friend referrals. Many high-profile cryptocurrency exchange platforms are going to have <strong>referral programs.</strong> So, you register on the exchange, and then receive a <strong>unique referral code.</strong></p>\n<p><strong><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto-8.o.jpg/" alt=\"How to get free crypto: Friend referrals.\" width=\"1000\" height=\"537\" /></strong></p>\n<p>Whenever you invite someone, and they register on the exchange with your code, you will receive certain benefits. Sometimes, these benefits include free crypto!</p>\n<p>It costs literally nothing to do so! This method of how to get free crypto is especially useful if you already have friends who are interested in cryptocurrencies, in general. They&rsquo;ll be able to join an exchange, and you&rsquo;ll be able to receive various benefits for inviting them - it&rsquo;s a win-win situation!</p>\n<h2>Reddit Moons</h2>\n<p>Now, the number 9 method of how to get free crypto is a bit of a curveball. It&rsquo;s not something that you&rsquo;ll come across often, yet is still considered to be an <strong>underrated approach to free crypto acquisition.</strong></p>\n<p><strong><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/media/how-to-get-free-crypto-9.o.jpg/" alt=\"How to get free crypto: Reddit moons.\" width=\"1000\" height=\"562\" /></strong></p>\n<p>The most popular crypto subreddit called<strong> r/cryptocurrency </strong>has a native token associated with it - a token called <strong>MOON.</strong> Participants of the subreddit are able to earn MOONs for simply interacting with posts, writing comments, answering questions, and creating discussions, themselves.</p>\n<p>While MOONs aren&rsquo;t likely to make you rich, it&rsquo;s a really unique way to earn crypto, while being part of the largest cryptocurrency community online. Though keep in mind that &ldquo;MOON farming&rdquo; isn&rsquo;t allowed on this subreddit - if you want to get free crypto, you&rsquo;ll need to contribute to the conversation, and bring some value to the table!</p>\n<h2>Finishing Off</h2>\n<p>Lastly, I&rsquo;d like to stress that you can definitely use all of the methods of getting free crypto that I&rsquo;ve discussed in this section at the same time! This will compound your potential gains, and help you get more crypto over time.</p>","preview_url":"https://www.bitdegree.org/crypto/learn/how-to-get-free-crypto","youtube_video":{"id":22,"channel_id":1,"sort":40,"video_title":"How to Get Free Crypto? (Explained with Animations)","description":"How to get free crypto?\n\nIn order to start trading cryptocurrencies, you’ll need to have some crypto in your wallet, in the first place. You could purchase it on an exchange, but you could also simple get free crypto from the various legitimate resources out there!\n\nIn this video, I’ll tell you about the most popular methods of how to get free crypto. All of these methods are tried-and-true, and will be void of any potential scams that might aim to steal your money.\n\nDo you know a unique method of how to get free cryptocurrency? Share it in the comments below!\n\nVideo Time Table:\n\n0:00 Introduction to How to Get Free Crypto\n0:51 Coinbase & Binance\n1:41 Crypto Mining\n2:43 Airdrops\n3:35 Staking & Yield Farming\n4:50 Cryptocurrency Faucets\n5:41 Crypto Debit Cards\n6:21 Using Brave Browser\n7:01 Friend Referrals\n7:35 Reddit Moons\n8:17 Wrap-up: How to Get Free Crypto?\n\nGet Quick Crypto Tips on Twitter - Follow:\nhttps://twitter.com/crypto_xplained\n\n#HowtoGetFreeBitcoin #HowtoGetFreeCrypto #BitcoinForFree #HowtoGetFreeCryptoonCoinbase #HowtoGetFreeCryptoonBinance","video_id":"aNjehGx3WqM","duration":527,"view_count":962,"thumbnail_url":"https://i.ytimg.com/vi/aNjehGx3WqM/hq720.jpg","thumbnail_width":1280,"thumbnail_height":720,"published_at":"2022-04-19 16:03:03","created_at":"2022-04-19T23:00:02.000000Z","updated_at":"2023-05-21T23:00:04.000000Z","channel":{"id":1,"title":"CryptoFinallyExplained","channel_id":"UCOryUY0yxC08eJtK23mNgiA","main_playlist_id":"UUOryUY0yxC08eJtK23mNgiA"}}},"chapterTitle":"Trading & Investing","cryptoBookSection":{"id":479,"featured_image_id":null,"original_id":null,"youtube_video_id":null,"author_id":42,"translator_id":null,"chapter_id":7,"title":"What is Crypto Arbitrage: The Main Principles","slug":"how-to-arbitrage-crypto","definition":"Did you know that there are arbitrage bots that profit from asset price differences between cryptocurrency exchanges without the need of human interference?","status":"published","content":"<p>In this section, we&rsquo;re going to talk about <strong>how to arbitrage crypto</strong>!</p>\n<p>For newcomers, <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-arbitrage/">crypto arbitrage</strong></a> may sound off-putting, daunting even. But there&rsquo;s no need for that. Once you understand the gist of things, it becomes intriguing. Crypto arbitrage is about <strong>being the smartest and the fastest in the room</strong>. And you&rsquo;ll see what kinds of challenges await those who are willing to enter the territory of this unpredictable trading strategy.</p>\n<p>Many people postpone learning about how to participate in crypto arbitrage simply because they&rsquo;re afraid they won&rsquo;t understand it. But even the pros once started at the beginning! And today, <strong>I&rsquo;m about to present to you this topic in an accessible manner</strong>, and help you discover how captivating it can be!</p>\n<p>In this section, we&rsquo;re going to take a deeper look not only into the crypto arbitrage&rsquo;s theoretical foundations, but also comparisons and real-life examples. Then, I&rsquo;ll cover how to find arbitrage opportunities, and what challenges await those who partake in it.</p>\n<p><em>Without further ado, let&rsquo;s get to it!</em></p>\n<h2>What is Crypto Arbitrage?</h2>\n<p><em>So, what is crypto arbitrage?</em></p>\n<p>Put simply, <strong>crypto arbitrage is a trading strategy</strong>. It refers to traders taking advantage of price differences in asset prices across different cryptocurrency exchanges. In practical terms, it means <strong>buying crypto on some platforms for one price, and selling it on other platforms for a higher price</strong>. The difference between the prices is the profit that crypto arbitrageurs end up with.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How to arbitrage crypto: What is crypto arbitrage?\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what_is_crypto_arbitrage_01.jpg/" alt=\"How to arbitrage crypto: What is crypto arbitrage?\" width=\"1000\" height=\"302\" /></p>\n<p><em>How about a down-to-earth example?</em>&nbsp;This is Tony. Summer is approaching, so his coworkers begin talking about buying a new bike. Tony senses a new opportunity to make a profit. So, he scans the market, and finds that there&rsquo;s a less-than-popular bicycle shop, around 100 miles away. And here&rsquo;s the catch: bikes are cheaper over there, when compared to the local shops around the area where Tony lives.</p>\n<p>So, instead of paying $500 for a bike locally, Tony goes out to this spot, and gets one for $400. He brings it back, and sells it for the local price of $500, thus making a profit of $100.</p>\n<p><strong>This is the basic concept of arbitrage</strong>, which can be applied to various markets and industries. You could even say that Tony has just participated in some kind of &ldquo;bicycle arbitrage&rdquo;. Now, change &ldquo;bicycle&rdquo; with &ldquo;crypto&rdquo;, and you&rsquo;ll get closer to what crypto arbitrage is all about.</p>\n<p>Moving on, let&rsquo;s go for a crypto-related example. Imagine <a href=https://www.bitdegree.org/"/crypto/buy-bitcoin-btc/">Bitcoin is trading at $22,000 on Exchange X, and $23,000 on Exchange Y. So, a trader would buy 1 Bitcoin on Exchange X, transfer it to Exchange Y, and sell it. The result is a $1,000 profit.</p>\n<p>Do keep in mind, though, that <strong>there are costs that are not evident at first sight</strong>. Just like it&rsquo;s essential to think of the transportation costs, storage and taxes when buying a bike, it&rsquo;s just as critical not to forget about the associated fees when participating in crypto arbitrage, as well. But more about it later.</p>\n<h2>Arbitrage Opportunities</h2>\n<p>The next thing to discuss is <strong>the question of where and how to find arbitrage opportunities</strong> <strong>in crypto</strong>. If it was that easy, everyone would be going all-in on crypto arbitrage. But the more you get to know about this trading style, the more you realize why it&rsquo;s definitely not a beginner-friendly crypto trading strategy.</p>\n<p><em>So, why is that the case?</em></p>\n<p><em><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How to arbitrage crypto: CEX.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what_is_crypto_arbitrage_02.jpg/" alt=\"How to arbitrage crypto: CEX.\" width=\"1000\" height=\"655\" /></em></p>\n<p>Exchange fees, for example, are enough to make it almost impossible to engage in crypto arbitrage on <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/best-cryptocurrency-exchange/">centralized crypto exchanges</strong></a>. The coin and token price variations on different CEXs are minor, and by buying assets, transferring and selling them, you would have to deal with several exchange fees, which could kill all of your potential financial gains.</p>\n<p>Therefore, <strong>crypto arbitrage requires more focus on something a bit more intricate than CEXs</strong>. For example, DEXs, or <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/best-decentralized-exchange/">decentralized exchanges</strong></a>.</p>\n<p><em>By the way, if you feel like your knowledge about CEXs and DEXs could use some refreshing, be sure to check out <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/learn/dex-vs-cex/">this <strong>section</strong></a>. It covers everything you need to know about crypto exchange platforms!</em></p>\n<p><em><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How to arbitrage crypto: DEX.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what_is_crypto_arbitrage_03.jpg/" alt=\"How to arbitrage crypto: DEX.\" width=\"1000\" height=\"584\" /></em></p>\n<p><strong>Now, let's get back to arbitrage opportunities</strong>. Crypto traders go to DEXs because, usually, they have different <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-liquidity-pool/">liquidity pools</strong></a> from those of centralized exchanges. This is important, because this affects the asset price for which it&rsquo;s being sold on the DEX. So, different liquidity pools lead to the possibility of the same asset being traded at different prices on different DEXs. <em>And different prices mean arbitrage opportunities</em>.</p>\n<p>What&rsquo;s more, <strong>DEXs are often less organized and less monitored</strong> than centralized exchanges, and this makes it more likely that price differences will arise.</p>\n<p>And it&rsquo;s worth mentioning that, unlike centralized exchanges, decentralized exchanges are <strong>more likely to apply lower commissions</strong>.</p>\n<p>Naturally, these opportunities are not long-lived. If they were, everyone would just capitalize on them until the liquidity pools dried out. Therefore, it takes a skillful arbitrage trader to identify these opportunities, make an informed decision, and act upon it quickly.</p>\n<p>But there&rsquo;s more to it than just decentralized exchanges. Another way to look for crypto arbitrage opportunities is to go to <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-peer-to-peer-p2p/">Peer-to-Peer (or, more commonly known as &ldquo;P2P&rdquo;) </strong></a>platforms.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How to arbitrage crypto: P2P.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what_is_crypto_arbitrage_04.jpg/" alt=\"How to arbitrage crypto: P2P.\" width=\"1000\" height=\"554\" /></p>\n<p>Unlike crypto exchanges, centralized or decentralized, <strong>P2P platforms allow individuals to directly exchange cryptocurrencies with each other</strong> without the need for an intermediary. This means that traders can execute trades for different prices, which can create price discrepancies for the same asset.</p>\n<p><em>On a side note, if you feel like learning more about P2P platforms wouldn&rsquo;t hurt, be sure to check out <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/learn/where-to-trade-crypto/">this section</strong></a> about different ways of trading cryptocurrencies - it will help you develop a better understanding of how to arbitrage crypto, as well!</em></p>\n<p>Okay, back to the subject. So, <strong>P2P arbitrage</strong> happens when a trader finds a seller on one P2P platform offering a crypto asset at a lower price than the market rate, buys it, and then immediately sells the same cryptocurrency on another P2P platform at a higher price.</p>\n<p>Yet, P2P arbitrage opportunities come with a handful of risks. First of all, <strong>it takes time to find these traders</strong> who are willing to sell assets for a price that is lower than the market rate.</p>\n<p>Not only that, <strong>traders have to be really quick after identifying such situations</strong>, because, during moments of hesitation, other traders would simply snatch this opportunity from right in front of their eyes.</p>\n<p><strong>The risk of fraud on P2P platforms</strong> must also be mentioned. It&rsquo;s a Peer-to-Peer kind of a deal, so you never know what kind of tricks the other party is about to pull out of their sleeve. Thus, P2P arbitrage requires extra caution.</p>\n<p>Finally, <strong>P2P trading platforms usually have lower trading volumes</strong> than, let&rsquo;s say, centralized or decentralized exchanges. You can buy just as much as the seller offers, not more. This, therefore, imposes limits on potential arbitrage gains.</p>\n<p>But, there&rsquo;s one huge drawback when it comes down to manual research of arbitrage opportunities. <strong>It takes a lot of time</strong>. And when it comes to locating, identifying, and executing a deal&hellip; Humans can&rsquo;t beat machines. If new traders relied entirely on themselves, they would soon see losses, and run into the question of <em>&ldquo;what is wrong with arbitrage trading in crypto?&rdquo;.</em></p>\n<p>Of course, smart arbitrage traders have employed cutting-edge technology to be unbeatable in this game. I&rsquo;m talking about <strong>arbitrage bots</strong>.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How to arbitrage crypto: Arbitrage bots.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what_is_crypto_arbitrage_05.jpg/" alt=\"How to arbitrage crypto: Arbitrage bots.\" width=\"1000\" height=\"472\" /></p>\n<p>Just like it sounds, <strong>arbitrage bots refer to automated trading programs</strong> that are designed with one specific purpose in mind: to take advantage of asset price differences between different cryptocurrency exchanges. If a minor price difference occurs, you can be sure that a bot will detect it quicker than your average human arbitrage trader.</p>\n<p><strong>Arbitrage bots use sophisticated algorithms</strong> to identify these opportunities and execute trades quickly and automatically, without the need for human intervention. This not only cuts out the need for manual research, but also removes the element of hesitation. In many cases, slow decision-making would simply end up in a lost arbitrage opportunity. Bots solve this problem, at least to an extent.</p>\n<p>Once a price difference is located, the bot executes the deal. The freshly-made money ends up in the pocket of the one who employed, or, in many cases, created the arbitrage bot themselves.</p>\n<p>To put things in perspective, <strong>here are some real-life examples</strong> of how efficient these bots can be.</p>\n<p>Dmitrii Ushakov, a Russian trader, has reportedly<strong> made $1.8 million in profit</strong> <strong>in just one month of using arbitrage bots</strong>. He used these bots precisely to monitor the price differences in the Bitcoin and <a href=https://www.bitdegree.org/"/crypto/buy-ethereum-eth/">Ethereum markets across exchange platforms.</p>\n<p>Or, consider this. A group of traders from the University of California made a fortune thanks to arbitrage bots. They developed the bots, let them loose, and, during the course of several months, <strong>ended up with over $50,000 in their pockets</strong>.</p>\n<p>So questions arise. <em>Why bother with learning how to participate in arbitrage in crypto?</em> <em>Why not learn how to build a crypto arbitrage bot by yourself? Why isn&rsquo;t everyone using them? </em>Yes, traders can go on and buy themselves a bot or two. But, quite naturally, <strong>the best bots are not for sale</strong>.</p>\n<p>Why sell them for money, when the bot itself can go on, and generate that money on its own? That&rsquo;s why all the market-ready arbitrage bots are watered-down versions of those that are not for sale.</p>\n<h2>Challenges &amp; Risks</h2>\n<p>Nevertheless, there is something that connects every way of participating in crypto arbitrage. Be it opportunities on DEXs, P2P platforms, or even access to arbitrage bots, as you learn how to arbitrage crypto, you will soon start to notice - <strong>they all run into the same challenges</strong>. That&rsquo;s right, crypto arbitrage is full of obstacles that can ruin even the most promising chances of making a profit.</p>\n<p>For starters, <strong>the crypto market is hyper-volatile</strong>. This means that price discrepancies, which are the reason why crypto arbitrage is even possible, disappear super quickly. And, sometimes, even immediate action isn&rsquo;t enough.</p>\n<p><em>Why? </em>Well, for example, sometimes, a bridge between blockchains, a solution to bring tokens from one blockchain into another, may run into technical problems when processing such transactions. The tokens could get stuck on it, leaving the trader with their money hanging in the air. And time spent on retrieving it would result in a wasted arbitrage opportunity, since the price differences would fluctuate in the meantime.</p>\n<p>As mentioned previously, <strong>arbitrage gains can often be killed by transaction fees</strong>. That&rsquo;s why traders opt for less expensive options that are easier to be found on DEXs or P2P platforms. But even then, the problem of fees is not fully avoided.</p>\n<p>You see, each transaction is a <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/learn/how-to-avoid-crypto-taxes/">taxable event</strong></a>, state tax jurisdiction-wise. This means that <strong>crypto arbitrage trading is subject to regulatory oversight</strong>, which usually varies in different regions of the world.</p>\n<p>Therefore, traders from different countries need to make sure that they <strong>comply with all applicable laws and regulations</strong>, and that they&rsquo;re aware of the taxes that they&rsquo;ll have to pay on all the money they&rsquo;re about to make. If this is ignored, such <em>&ldquo;unexpected fees&rdquo; </em>could really take a toll on a trader's gains, no pun intended.</p>\n<h2>Wrapping Up</h2>\n<p>Wrapping things up, as you can see, crypto arbitrage can be a really lucrative way of approaching crypto, and <strong>there&rsquo;s no correct way of how to do arbitrage in crypto</strong>. But, in order to execute such a trading strategy successfully, crypto traders really need to step up their game, be well-prepared, knowledgeable, and have a lot of hands-on experience and awareness about the risks involved in crypto arbitrage.</p>\n<p>&nbsp;</p>","meta_title":"Crypto Arbitrage: How to Arbitrage Crypto?","meta_description":"Are you trying to figure out how to arbitrage crypto and what crypto arbitrage opportunities there are? Find out all answers right here!","meta_keywords":"how to arbitrage crypto, how to find arbitrage opportunities in crypto, what is wrong with arbitrage trading crypto, how to build a crypto arbitrage bot","order":6,"language":"en","created_at":"2023-04-24T13:40:42.000000Z","updated_at":"2023-04-24T14:14:49.000000Z","modified_content":"<p>In this section, we&rsquo;re going to talk about <strong>how to arbitrage crypto</strong>!</p>\n<p>For newcomers, <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-arbitrage/">crypto arbitrage</strong></a> may sound off-putting, daunting even. But there&rsquo;s no need for that. Once you understand the gist of things, it becomes intriguing. Crypto arbitrage is about <strong>being the smartest and the fastest in the room</strong>. And you&rsquo;ll see what kinds of challenges await those who are willing to enter the territory of this unpredictable trading strategy.</p>\n<p>Many people postpone learning about how to participate in crypto arbitrage simply because they&rsquo;re afraid they won&rsquo;t understand it. But even the pros once started at the beginning! And today, <strong>I&rsquo;m about to present to you this topic in an accessible manner</strong>, and help you discover how captivating it can be!</p>\n<p>In this section, we&rsquo;re going to take a deeper look not only into the crypto arbitrage&rsquo;s theoretical foundations, but also comparisons and real-life examples. Then, I&rsquo;ll cover how to find arbitrage opportunities, and what challenges await those who partake in it.</p>\n<p><em>Without further ado, let&rsquo;s get to it!</em></p>\n<h2>What is Crypto Arbitrage?</h2>\n<p><em>So, what is crypto arbitrage?</em></p>\n<p>Put simply, <strong>crypto arbitrage is a trading strategy</strong>. It refers to traders taking advantage of price differences in asset prices across different cryptocurrency exchanges. In practical terms, it means <strong>buying crypto on some platforms for one price, and selling it on other platforms for a higher price</strong>. The difference between the prices is the profit that crypto arbitrageurs end up with.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How to arbitrage crypto: What is crypto arbitrage?\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what_is_crypto_arbitrage_01.jpg/" alt=\"How to arbitrage crypto: What is crypto arbitrage?\" width=\"1000\" height=\"302\" /></p>\n<p><em>How about a down-to-earth example?</em>&nbsp;This is Tony. Summer is approaching, so his coworkers begin talking about buying a new bike. Tony senses a new opportunity to make a profit. So, he scans the market, and finds that there&rsquo;s a less-than-popular bicycle shop, around 100 miles away. And here&rsquo;s the catch: bikes are cheaper over there, when compared to the local shops around the area where Tony lives.</p>\n<p>So, instead of paying $500 for a bike locally, Tony goes out to this spot, and gets one for $400. He brings it back, and sells it for the local price of $500, thus making a profit of $100.</p>\n<p><strong>This is the basic concept of arbitrage</strong>, which can be applied to various markets and industries. You could even say that Tony has just participated in some kind of &ldquo;bicycle arbitrage&rdquo;. Now, change &ldquo;bicycle&rdquo; with &ldquo;crypto&rdquo;, and you&rsquo;ll get closer to what crypto arbitrage is all about.</p>\n<p>Moving on, let&rsquo;s go for a crypto-related example. Imagine <a href=https://www.bitdegree.org/"/crypto/buy-bitcoin-btc/">Bitcoin is trading at $22,000 on Exchange X, and $23,000 on Exchange Y. So, a trader would buy 1 Bitcoin on Exchange X, transfer it to Exchange Y, and sell it. The result is a $1,000 profit.</p>\n<p>Do keep in mind, though, that <strong>there are costs that are not evident at first sight</strong>. Just like it&rsquo;s essential to think of the transportation costs, storage and taxes when buying a bike, it&rsquo;s just as critical not to forget about the associated fees when participating in crypto arbitrage, as well. But more about it later.</p>\n<h2>Arbitrage Opportunities</h2>\n<p>The next thing to discuss is <strong>the question of where and how to find arbitrage opportunities</strong> <strong>in crypto</strong>. If it was that easy, everyone would be going all-in on crypto arbitrage. But the more you get to know about this trading style, the more you realize why it&rsquo;s definitely not a beginner-friendly crypto trading strategy.</p>\n<p><em>So, why is that the case?</em></p>\n<p><em><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How to arbitrage crypto: CEX.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what_is_crypto_arbitrage_02.jpg/" alt=\"How to arbitrage crypto: CEX.\" width=\"1000\" height=\"655\" /></em></p>\n<p>Exchange fees, for example, are enough to make it almost impossible to engage in crypto arbitrage on <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/best-cryptocurrency-exchange/">centralized crypto exchanges</strong></a>. The coin and token price variations on different CEXs are minor, and by buying assets, transferring and selling them, you would have to deal with several exchange fees, which could kill all of your potential financial gains.</p>\n<p>Therefore, <strong>crypto arbitrage requires more focus on something a bit more intricate than CEXs</strong>. For example, DEXs, or <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/best-decentralized-exchange/">decentralized exchanges</strong></a>.</p>\n<p><em>By the way, if you feel like your knowledge about CEXs and DEXs could use some refreshing, be sure to check out <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/learn/dex-vs-cex/">this <strong>section</strong></a>. It covers everything you need to know about crypto exchange platforms!</em></p>\n<p><em><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How to arbitrage crypto: DEX.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what_is_crypto_arbitrage_03.jpg/" alt=\"How to arbitrage crypto: DEX.\" width=\"1000\" height=\"584\" /></em></p>\n<p><strong>Now, let's get back to arbitrage opportunities</strong>. Crypto traders go to DEXs because, usually, they have different <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-liquidity-pool/">liquidity pools</strong></a> from those of centralized exchanges. This is important, because this affects the asset price for which it&rsquo;s being sold on the DEX. So, different liquidity pools lead to the possibility of the same asset being traded at different prices on different DEXs. <em>And different prices mean arbitrage opportunities</em>.</p>\n<p>What&rsquo;s more, <strong>DEXs are often less organized and less monitored</strong> than centralized exchanges, and this makes it more likely that price differences will arise.</p>\n<p>And it&rsquo;s worth mentioning that, unlike centralized exchanges, decentralized exchanges are <strong>more likely to apply lower commissions</strong>.</p>\n<p>Naturally, these opportunities are not long-lived. If they were, everyone would just capitalize on them until the liquidity pools dried out. Therefore, it takes a skillful arbitrage trader to identify these opportunities, make an informed decision, and act upon it quickly.</p>\n<p>But there&rsquo;s more to it than just decentralized exchanges. Another way to look for crypto arbitrage opportunities is to go to <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-peer-to-peer-p2p/">Peer-to-Peer (or, more commonly known as &ldquo;P2P&rdquo;) </strong></a>platforms.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How to arbitrage crypto: P2P.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what_is_crypto_arbitrage_04.jpg/" alt=\"How to arbitrage crypto: P2P.\" width=\"1000\" height=\"554\" /></p>\n<p>Unlike crypto exchanges, centralized or decentralized, <strong>P2P platforms allow individuals to directly exchange cryptocurrencies with each other</strong> without the need for an intermediary. This means that traders can execute trades for different prices, which can create price discrepancies for the same asset.</p>\n<p><em>On a side note, if you feel like learning more about P2P platforms wouldn&rsquo;t hurt, be sure to check out <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/learn/where-to-trade-crypto/">this section</strong></a> about different ways of trading cryptocurrencies - it will help you develop a better understanding of how to arbitrage crypto, as well!</em></p>\n<p>Okay, back to the subject. So, <strong>P2P arbitrage</strong> happens when a trader finds a seller on one P2P platform offering a crypto asset at a lower price than the market rate, buys it, and then immediately sells the same cryptocurrency on another P2P platform at a higher price.</p>\n<p>Yet, P2P arbitrage opportunities come with a handful of risks. First of all, <strong>it takes time to find these traders</strong> who are willing to sell assets for a price that is lower than the market rate.</p>\n<p>Not only that, <strong>traders have to be really quick after identifying such situations</strong>, because, during moments of hesitation, other traders would simply snatch this opportunity from right in front of their eyes.</p>\n<p><strong>The risk of fraud on P2P platforms</strong> must also be mentioned. It&rsquo;s a Peer-to-Peer kind of a deal, so you never know what kind of tricks the other party is about to pull out of their sleeve. Thus, P2P arbitrage requires extra caution.</p>\n<p>Finally, <strong>P2P trading platforms usually have lower trading volumes</strong> than, let&rsquo;s say, centralized or decentralized exchanges. You can buy just as much as the seller offers, not more. This, therefore, imposes limits on potential arbitrage gains.</p>\n<p>But, there&rsquo;s one huge drawback when it comes down to manual research of arbitrage opportunities. <strong>It takes a lot of time</strong>. And when it comes to locating, identifying, and executing a deal&hellip; Humans can&rsquo;t beat machines. If new traders relied entirely on themselves, they would soon see losses, and run into the question of <em>&ldquo;what is wrong with arbitrage trading in crypto?&rdquo;.</em></p>\n<p>Of course, smart arbitrage traders have employed cutting-edge technology to be unbeatable in this game. I&rsquo;m talking about <strong>arbitrage bots</strong>.</p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How to arbitrage crypto: Arbitrage bots.\" src=https://www.bitdegree.org/"https://assets.bitdegree.org/crypto/storage/optimized/what_is_crypto_arbitrage_05.jpg/" alt=\"How to arbitrage crypto: Arbitrage bots.\" width=\"1000\" height=\"472\" /></p>\n<p>Just like it sounds, <strong>arbitrage bots refer to automated trading programs</strong> that are designed with one specific purpose in mind: to take advantage of asset price differences between different cryptocurrency exchanges. If a minor price difference occurs, you can be sure that a bot will detect it quicker than your average human arbitrage trader.</p>\n<p><strong>Arbitrage bots use sophisticated algorithms</strong> to identify these opportunities and execute trades quickly and automatically, without the need for human intervention. This not only cuts out the need for manual research, but also removes the element of hesitation. In many cases, slow decision-making would simply end up in a lost arbitrage opportunity. Bots solve this problem, at least to an extent.</p>\n<p>Once a price difference is located, the bot executes the deal. The freshly-made money ends up in the pocket of the one who employed, or, in many cases, created the arbitrage bot themselves.</p>\n<p>To put things in perspective, <strong>here are some real-life examples</strong> of how efficient these bots can be.</p>\n<p>Dmitrii Ushakov, a Russian trader, has reportedly<strong> made $1.8 million in profit</strong> <strong>in just one month of using arbitrage bots</strong>. He used these bots precisely to monitor the price differences in the Bitcoin and <a href=https://www.bitdegree.org/"/crypto/buy-ethereum-eth/">Ethereum markets across exchange platforms.</p>\n<p>Or, consider this. A group of traders from the University of California made a fortune thanks to arbitrage bots. They developed the bots, let them loose, and, during the course of several months, <strong>ended up with over $50,000 in their pockets</strong>.</p>\n<p>So questions arise. <em>Why bother with learning how to participate in arbitrage in crypto?</em> <em>Why not learn how to build a crypto arbitrage bot by yourself? Why isn&rsquo;t everyone using them? </em>Yes, traders can go on and buy themselves a bot or two. But, quite naturally, <strong>the best bots are not for sale</strong>.</p>\n<p>Why sell them for money, when the bot itself can go on, and generate that money on its own? That&rsquo;s why all the market-ready arbitrage bots are watered-down versions of those that are not for sale.</p>\n<h2>Challenges &amp; Risks</h2>\n<p>Nevertheless, there is something that connects every way of participating in crypto arbitrage. Be it opportunities on DEXs, P2P platforms, or even access to arbitrage bots, as you learn how to arbitrage crypto, you will soon start to notice - <strong>they all run into the same challenges</strong>. That&rsquo;s right, crypto arbitrage is full of obstacles that can ruin even the most promising chances of making a profit.</p>\n<p>For starters, <strong>the crypto market is hyper-volatile</strong>. This means that price discrepancies, which are the reason why crypto arbitrage is even possible, disappear super quickly. And, sometimes, even immediate action isn&rsquo;t enough.</p>\n<p><em>Why? </em>Well, for example, sometimes, a bridge between blockchains, a solution to bring tokens from one blockchain into another, may run into technical problems when processing such transactions. The tokens could get stuck on it, leaving the trader with their money hanging in the air. And time spent on retrieving it would result in a wasted arbitrage opportunity, since the price differences would fluctuate in the meantime.</p>\n<p>As mentioned previously, <strong>arbitrage gains can often be killed by transaction fees</strong>. That&rsquo;s why traders opt for less expensive options that are easier to be found on DEXs or P2P platforms. But even then, the problem of fees is not fully avoided.</p>\n<p>You see, each transaction is a <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/learn/how-to-avoid-crypto-taxes/">taxable event</strong></a>, state tax jurisdiction-wise. This means that <strong>crypto arbitrage trading is subject to regulatory oversight</strong>, which usually varies in different regions of the world.</p>\n<p>Therefore, traders from different countries need to make sure that they <strong>comply with all applicable laws and regulations</strong>, and that they&rsquo;re aware of the taxes that they&rsquo;ll have to pay on all the money they&rsquo;re about to make. If this is ignored, such <em>&ldquo;unexpected fees&rdquo; </em>could really take a toll on a trader's gains, no pun intended.</p>\n<h2>Wrapping Up</h2>\n<p>Wrapping things up, as you can see, crypto arbitrage can be a really lucrative way of approaching crypto, and <strong>there&rsquo;s no correct way of how to do arbitrage in crypto</strong>. But, in order to execute such a trading strategy successfully, crypto traders really need to step up their game, be well-prepared, knowledgeable, and have a lot of hands-on experience and awareness about the risks involved in crypto arbitrage.</p>\n<p>&nbsp;</p>","preview_url":"https://www.bitdegree.org/crypto/learn/how-to-arbitrage-crypto","youtube_video":null,"featured_image":null},"chapterList":[{"id":1,"title":"Blockchain","slug":"blockchain","updated":null,"chapter":"https://assets.bitdegree.org/crypto/assets/crypto-book/chapters/learn-blockchain.jpg","chapter_simple":"https://assets.bitdegree.org/crypto/assets/crypto-book/chapters-simple/blockchain-101.jpg","rating":100,"sections":[{"slug":"what-is-blockchain","title":"What is the Blockchain?","featured_image_id":6412,"status":"published","chapter_id":1,"language":"en","order":1,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/what-is-blockchain","featured_image":{"id":6412,"uuid":"152ba579-ce8d-488a-9e06-bcd99e976b7d","public_url":"https://assets.bitdegree.org/crypto/storage/media/what-is-blockchain-626fbe085a0cd.o.jpg","path":"crypto/storage/media/what-is-blockchain-626fbe085a0cd.o.jpg","original_path":"crypto/storage/media/what-is-blockchain-626fbe085a0cd.jpg","name":"what-is-blockchain-626fbe085a0cd.o.jpg","original_name":"what-is-blockchain.jpg","title":null,"alt":null,"width":768,"height":478,"disk":"spaces","status":"uploaded","readable_file_size":"93.86KB"},"youtube_video":null},{"slug":"decentralized-blockchain","title":"Anonymous & Decentralized Blockchains: The Cornerstone of Crypto","featured_image_id":7205,"status":"published","chapter_id":1,"language":"en","order":2,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/decentralized-blockchain","featured_image":{"id":7205,"uuid":"c5d6f6a7-4914-4d6b-9fdd-e94dfb0bae82","public_url":"https://assets.bitdegree.org/crypto/storage/media/decentralized-blockchain-featured-image.o.jpg","path":"crypto/storage/media/decentralized-blockchain-featured-image.o.jpg","original_path":"crypto/storage/media/decentralized-blockchain-featured-image.jpg","name":"decentralized-blockchain-featured-image.o.jpg","original_name":"decentralized-blockchain-featured-image.jpg","title":null,"alt":null,"width":768,"height":478,"disk":"spaces","status":"uploaded","readable_file_size":"136.00KB"},"youtube_video":null},{"slug":"blockchain-transaction","title":"What is a Blockchain Transaction in 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Analysis","slug":"crypto-analysis","updated":null,"chapter":"https://assets.bitdegree.org/crypto/assets/crypto-book/chapters/learn-crypto-analysis.jpg","chapter_simple":"https://assets.bitdegree.org/crypto/assets/crypto-book/chapters-simple/crypto-analysis-101.jpg","rating":100,"sections":[{"slug":"what-is-bullish-and-bearish","title":"Bearish and Bullish Markets: Do They Matter?","featured_image_id":null,"status":"published","chapter_id":8,"language":"en","order":1,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/what-is-bullish-and-bearish","featured_image":null,"youtube_video":null},{"slug":"best-technical-analysis-indicators-for-crypto","title":"5 Best Crypto Technical Analysis Indicators You Must Know About","featured_image_id":null,"status":"published","chapter_id":8,"language":"en","order":2,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/best-technical-analysis-indicators-for-crypto","featured_image":null,"youtube_video":null},{"slug":"what-is-candlesticks","title":"Technical Analysis: What are Candlesticks, Trendlines, and Patterns?","featured_image_id":null,"status":"published","chapter_id":8,"language":"en","order":3,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/what-is-candlesticks","featured_image":null,"youtube_video":null},{"slug":"how-to-track-new-crypto-coins","title":"Crypto Tracking: How to Track Your Favorite Coins & Tokens?","featured_image_id":null,"status":"published","chapter_id":8,"language":"en","order":4,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/how-to-track-new-crypto-coins","featured_image":null,"youtube_video":null},{"slug":"how-to-research-crypto","title":"Crypto Research Fundamentals & Social Signals: Your Daily Trading Strategy","featured_image_id":null,"status":"published","chapter_id":8,"language":"en","order":5,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/how-to-research-crypto","featured_image":null,"youtube_video":null}]},{"id":9,"title":"Mining","slug":"mining","updated":false,"chapter":"https://assets.bitdegree.org/crypto/assets/crypto-book/chapters/learn-crypto-mining.jpg","chapter_simple":"https://assets.bitdegree.org/crypto/assets/crypto-book/chapters-simple/crypto-mining-101.jpg","rating":80,"sections":[]},{"id":10,"title":"Crypto Terms","updated":false,"chapter":"https://assets.bitdegree.org/crypto/assets/crypto-book/chapters/crypto-101-glossary.jpg","chapter_simple":"https://assets.bitdegree.org/crypto/assets/crypto-book/chapters-simple/crypto-glossary-101.jpg","rating":100,"sections":["A","B","C","D","E","F","G","H","I","J","K","L","M","N","O","P","Q","R","S","T","U","V","W","X","Y","Z"]}],"currentChapter":"trading-and-investing","currentSection":"how-to-arbitrage-crypto","readingTime":9,"readingLevel":"medium"},"url":"/crypto/learn/how-to-arbitrage-crypto","version":"cdd198d50cbe5c9c21c9329d7c096ffc"}" class="container-fluid d-flex crypto-book p-0">

All Crypto From

Scratch!

Crypto 101 Handbook

Chapter 1: Blockchain

• 1.1

  What is the Blockchain?
  1.2

  Anonymous & Decentralized Blockchains: The Cornerstone of Crypto
  1.3

  What is a Blockchain Transaction in Crypto?
  1.4

  The Different Types of Crypto Fees Explained
  1.5

  The Key Notion Behind the Concept of Bridging in Crypto
  1.6

  Different Types of Blockchains: What to Look Out For?

Chapter 2: Cryptocurrencies

• 2.1

  What is a Cryptocurrency?
  2.2

  How Does Cryptocurrency Work?
  2.3

  Is Cryptocurrency a Good Investment? The Pros & Cons
  2.4

  Coin VS Token: How Do They Differ?
  2.5

  What are Stablecoins, Altcoins & Wrapped Coins?
  2.6

  Bitcoin: the Pioneer of the Crypto World
  2.7

  The Ultimate Blockchain for dApp Creation: Ethereum
  2.8

  What is Cardano and What is It Used For?
  2.9

  Shiba Inu: the Dogecoin Killer
  2.10

  Is Solana an Improved Version of Ethereum?
  2.11

  The Bridge Between Blockchains: Polkadot
  2.12

  Polygon: the Essential Scaling Solution for Ethereum
  2.13

  The Practical Use of Crypto

Chapter 3: Crypto Exchanges

• 3.1

  How do Cryptocurrency Exchanges Work?
  3.2

  DEX VS CEX: Two Sides of the Crypto Exchange Industry
  3.3

  Crypto Day Trading: The Difference Between Buying, Trading, and Swapping
  3.4

  KYC & AML: The Key to Complying With Legal Industry Standards
  3.5

  From Fiat to Crypto: How to Buy Crypto for the First Time
  3.6

  Taking Profits: Turning Crypto Into Fiat
  3.7

  You’ve Got Crypto: What Can You Do With It?

Chapter 4: Crypto Wallets

• 4.1

  What is a Crypto Wallet?
  4.2

  Hot Wallet VS Cold Wallet: Which One to Pick?
  4.3

  What are Non-Custodial Crypto Wallets?
  4.4

  Metamask: The Leading Non-Custodial Wallet
  4.5

  The Key Crypto Wallet Safety Practices: How Safe Can Crypto Be?

Chapter 5: NFTs

• 5.1

  What are Non-Fungible Tokens (NFTs)?
  5.2

  NFT Trading: The Ins and Outs
  5.3

  Tips and Tricks of Choosing the Right NFTs
  5.4

  How to Store NFTs: Best Practices
  5.5

  How to Create Your Own NFTs?
  5.6

  Making Passive Money with NFTs

Chapter 6: dApps & Defi

• 6.1

  What is Decentralized Finance (DeFi)?
  6.2

  DeFi 2.0: The New Version of Decentralized Finance
  6.3

  What Are dApps and How Do They Work?
  6.4

  Picking the Right dApps: Dos and Don'ts
  6.5

  Web 3.0: The Future of the Internet
  6.6

  What is the Core Purpose of Smart Contracts?
  6.7

  The Notion of a Decentralized Autonomous Ogranization (DAO)
  6.8

  What is the Goal of Staking Crypto Assets?
  6.9

  What is a Liquidity Pool and How Does It Work?
  6.10

  Automated Market Maker: the Cornerstone of the Decentralized Crypto Exchange Industry
  6.11

  The Main Yield Farming Techniques
  6.12

  Crypto Oracles: The Link Between Blockchain and Outside World Data
  6.13

  The Peculiarities of Decentralized Crypto Gambling
  6.14

  Metaverse: A New Perception of Reality

Chapter 7: Trading & Investing

• 7.1

  Where Can You Trade Cryptocurrencies?
  7.2

  Investing in Crypto: What Investing Options Do You Have?
  7.3

  ICO vs IDO vs IEO: Which One is the One?
  7.4

  What are Crypto Airdrops and How to Get Them?
  7.5

  How to Get Free Crypto Assets?
  7.6

  What is Crypto Arbitrage: The Main Principles
  7.7

  What is FUD: How to Use It to Your Advantage While Investing in Crypto?
  7.8

  Investing in Cryptocurrency: How to Manage Your Risks?
  7.9

  What is a Rug Pull in Crypto?
  7.10

  How to Spot and Avoid Rug Pulls?
  7.11

  The Key Legal Techniques of Avoiding Crypto Taxes

Chapter 8: Crypto Analysis

• 8.1

  Bearish and Bullish Markets: Do They Matter?
  8.2

  5 Best Crypto Technical Analysis Indicators You Must Know About
  8.3

  Technical Analysis: What are Candlesticks, Trendlines, and Patterns?
  8.4

  Crypto Tracking: How to Track Your Favorite Coins & Tokens?
  8.5

  Crypto Research Fundamentals & Social Signals: Your Daily Trading Strategy

Chapter 9: Mining

coming soon

Chapter 10: Crypto Terms

• 10.1

  All Crypto Terms

# ABCDEFGHIJKLMNOPQRSTUVWXYZ

Handbook Cover Page

Chapter 7: Trading & Investing

What is Crypto Arbitrage: The Main Principles

Did you know that there are arbitrage bots that profit from asset price differences between cryptocurrency exchanges without the need of human interference?

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9 minutes

In this section, we’re going to talk about how to arbitrage crypto!

For newcomers, crypto arbitrage may sound off-putting, daunting even. But there’s no need for that. Once you understand the gist of things, it becomes intriguing. Crypto arbitrage is about being the smartest and the fastest in the room. And you’ll see what kinds of challenges await those who are willing to enter the territory of this unpredictable trading strategy.

Many people postpone learning about how to participate in crypto arbitrage simply because they’re afraid they won’t understand it. But even the pros once started at the beginning! And today, I’m about to present to you this topic in an accessible manner, and help you discover how captivating it can be!

In this section, we’re going to take a deeper look not only into the crypto arbitrage’s theoretical foundations, but also comparisons and real-life examples. Then, I’ll cover how to find arbitrage opportunities, and what challenges await those who partake in it.

Without further ado, let’s get to it!

What is Crypto Arbitrage?

So, what is crypto arbitrage?

Put simply, crypto arbitrage is a trading strategy. It refers to traders taking advantage of price differences in asset prices across different cryptocurrency exchanges. In practical terms, it means buying crypto on some platforms for one price, and selling it on other platforms for a higher price. The difference between the prices is the profit that crypto arbitrageurs end up with.

How about a down-to-earth example? This is Tony. Summer is approaching, so his coworkers begin talking about buying a new bike. Tony senses a new opportunity to make a profit. So, he scans the market, and finds that there’s a less-than-popular bicycle shop, around 100 miles away. And here’s the catch: bikes are cheaper over there, when compared to the local shops around the area where Tony lives.

So, instead of paying $500 for a bike locally, Tony goes out to this spot, and gets one for $400. He brings it back, and sells it for the local price of $500, thus making a profit of $100.

This is the basic concept of arbitrage, which can be applied to various markets and industries. You could even say that Tony has just participated in some kind of “bicycle arbitrage”. Now, change “bicycle” with “crypto”, and you’ll get closer to what crypto arbitrage is all about.

Moving on, let’s go for a crypto-related example. Imagine Bitcoin is trading at $22,000 on Exchange X, and $23,000 on Exchange Y. So, a trader would buy 1 Bitcoin on Exchange X, transfer it to Exchange Y, and sell it. The result is a $1,000 profit.

Do keep in mind, though, that there are costs that are not evident at first sight. Just like it’s essential to think of the transportation costs, storage and taxes when buying a bike, it’s just as critical not to forget about the associated fees when participating in crypto arbitrage, as well. But more about it later.

Arbitrage Opportunities

The next thing to discuss is the question of where and how to find arbitrage opportunities in crypto. If it was that easy, everyone would be going all-in on crypto arbitrage. But the more you get to know about this trading style, the more you realize why it’s definitely not a beginner-friendly crypto trading strategy.

So, why is that the case?

Exchange fees, for example, are enough to make it almost impossible to engage in crypto arbitrage on centralized crypto exchanges. The coin and token price variations on different CEXs are minor, and by buying assets, transferring and selling them, you would have to deal with several exchange fees, which could kill all of your potential financial gains.

Therefore, crypto arbitrage requires more focus on something a bit more intricate than CEXs. For example, DEXs, or decentralized exchanges.

By the way, if you feel like your knowledge about CEXs and DEXs could use some refreshing, be sure to check out this section. It covers everything you need to know about crypto exchange platforms!

Now, let's get back to arbitrage opportunities. Crypto traders go to DEXs because, usually, they have different liquidity pools from those of centralized exchanges. This is important, because this affects the asset price for which it’s being sold on the DEX. So, different liquidity pools lead to the possibility of the same asset being traded at different prices on different DEXs. And different prices mean arbitrage opportunities.

What’s more, DEXs are often less organized and less monitored than centralized exchanges, and this makes it more likely that price differences will arise.

And it’s worth mentioning that, unlike centralized exchanges, decentralized exchanges are more likely to apply lower commissions.

Naturally, these opportunities are not long-lived. If they were, everyone would just capitalize on them until the liquidity pools dried out. Therefore, it takes a skillful arbitrage trader to identify these opportunities, make an informed decision, and act upon it quickly.

But there’s more to it than just decentralized exchanges. Another way to look for crypto arbitrage opportunities is to go to Peer-to-Peer (or, more commonly known as “P2P”) platforms.

Unlike crypto exchanges, centralized or decentralized, P2P platforms allow individuals to directly exchange cryptocurrencies with each other without the need for an intermediary. This means that traders can execute trades for different prices, which can create price discrepancies for the same asset.

On a side note, if you feel like learning more about P2P platforms wouldn’t hurt, be sure to check out this section about different ways of trading cryptocurrencies - it will help you develop a better understanding of how to arbitrage crypto, as well!

Okay, back to the subject. So, P2P arbitrage happens when a trader finds a seller on one P2P platform offering a crypto asset at a lower price than the market rate, buys it, and then immediately sells the same cryptocurrency on another P2P platform at a higher price.

Yet, P2P arbitrage opportunities come with a handful of risks. First of all, it takes time to find these traders who are willing to sell assets for a price that is lower than the market rate.

Not only that, traders have to be really quick after identifying such situations, because, during moments of hesitation, other traders would simply snatch this opportunity from right in front of their eyes.

The risk of fraud on P2P platforms must also be mentioned. It’s a Peer-to-Peer kind of a deal, so you never know what kind of tricks the other party is about to pull out of their sleeve. Thus, P2P arbitrage requires extra caution.

Finally, P2P trading platforms usually have lower trading volumes than, let’s say, centralized or decentralized exchanges. You can buy just as much as the seller offers, not more. This, therefore, imposes limits on potential arbitrage gains.

But, there’s one huge drawback when it comes down to manual research of arbitrage opportunities. It takes a lot of time. And when it comes to locating, identifying, and executing a deal… Humans can’t beat machines. If new traders relied entirely on themselves, they would soon see losses, and run into the question of “what is wrong with arbitrage trading in crypto?”.

Of course, smart arbitrage traders have employed cutting-edge technology to be unbeatable in this game. I’m talking about arbitrage bots.

Just like it sounds, arbitrage bots refer to automated trading programs that are designed with one specific purpose in mind: to take advantage of asset price differences between different cryptocurrency exchanges. If a minor price difference occurs, you can be sure that a bot will detect it quicker than your average human arbitrage trader.

Arbitrage bots use sophisticated algorithms to identify these opportunities and execute trades quickly and automatically, without the need for human intervention. This not only cuts out the need for manual research, but also removes the element of hesitation. In many cases, slow decision-making would simply end up in a lost arbitrage opportunity. Bots solve this problem, at least to an extent.

Once a price difference is located, the bot executes the deal. The freshly-made money ends up in the pocket of the one who employed, or, in many cases, created the arbitrage bot themselves.

To put things in perspective, here are some real-life examples of how efficient these bots can be.

Dmitrii Ushakov, a Russian trader, has reportedly made $1.8 million in profit in just one month of using arbitrage bots. He used these bots precisely to monitor the price differences in the Bitcoin and Ethereum markets across exchange platforms.

Or, consider this. A group of traders from the University of California made a fortune thanks to arbitrage bots. They developed the bots, let them loose, and, during the course of several months, ended up with over $50,000 in their pockets.

So questions arise. Why bother with learning how to participate in arbitrage in crypto? Why not learn how to build a crypto arbitrage bot by yourself? Why isn’t everyone using them? Yes, traders can go on and buy themselves a bot or two. But, quite naturally, the best bots are not for sale.

Why sell them for money, when the bot itself can go on, and generate that money on its own? That’s why all the market-ready arbitrage bots are watered-down versions of those that are not for sale.

Challenges & Risks

Nevertheless, there is something that connects every way of participating in crypto arbitrage. Be it opportunities on DEXs, P2P platforms, or even access to arbitrage bots, as you learn how to arbitrage crypto, you will soon start to notice - they all run into the same challenges. That’s right, crypto arbitrage is full of obstacles that can ruin even the most promising chances of making a profit.

For starters, the crypto market is hyper-volatile. This means that price discrepancies, which are the reason why crypto arbitrage is even possible, disappear super quickly. And, sometimes, even immediate action isn’t enough.

Why? Well, for example, sometimes, a bridge between blockchains, a solution to bring tokens from one blockchain into another, may run into technical problems when processing such transactions. The tokens could get stuck on it, leaving the trader with their money hanging in the air. And time spent on retrieving it would result in a wasted arbitrage opportunity, since the price differences would fluctuate in the meantime.

As mentioned previously, arbitrage gains can often be killed by transaction fees. That’s why traders opt for less expensive options that are easier to be found on DEXs or P2P platforms. But even then, the problem of fees is not fully avoided.

You see, each transaction is a taxable event, state tax jurisdiction-wise. This means that crypto arbitrage trading is subject to regulatory oversight, which usually varies in different regions of the world.

Therefore, traders from different countries need to make sure that they comply with all applicable laws and regulations, and that they’re aware of the taxes that they’ll have to pay on all the money they’re about to make. If this is ignored, such “unexpected fees” could really take a toll on a trader's gains, no pun intended.

Wrapping Up

Wrapping things up, as you can see, crypto arbitrage can be a really lucrative way of approaching crypto, and there’s no correct way of how to do arbitrage in crypto. But, in order to execute such a trading strategy successfully, crypto traders really need to step up their game, be well-prepared, knowledgeable, and have a lot of hands-on experience and awareness about the risks involved in crypto arbitrage.

 

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