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How Do High Transaction Costs Affect the Profitability of Arbitrage Strategies?

Arbitrage strategies seek to profit from small price discrepancies across different markets. These strategies rely on quick execution and low operational costs.

High transaction costs, especially network fees and exchange fees, can easily consume the entire profit margin of the arbitrage opportunity. This renders the strategy non-viable.

Therefore, low, predictable transaction costs are crucial for successful arbitrage.

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