Are There Automated Bots Specifically Designed for Cryptocurrency Arbitrage, and How Do They Function?

Yes, automated bots are essential for modern cryptocurrency arbitrage. They function by connecting to multiple exchanges simultaneously via Application Programming Interfaces (APIs).

The bots continuously monitor prices for the same asset across these exchanges in real-time. When a price discrepancy is identified that exceeds a predefined threshold (accounting for fees and potential slippage), the bot automatically executes buy and sell orders to capture the profit.

Their high speed and constant monitoring allow them to exploit opportunities that are too fleeting for human traders.