# What Are the Risks Associated with Cross-Exchange Arbitrage? ⎊ Path

**Published:** 2025-12-05
**Author:** Greeks.live
**Categories:** Path

---

## What Are the Risks Associated with Cross-Exchange Arbitrage?

The primary risks associated with cross-exchange arbitrage are execution risk, transfer delays, and exchange-specific risks. Execution risk occurs when the price changes before the trade can be completed, eliminating the arbitrage opportunity.

Transfer delays between exchanges can also be a significant issue, as the price difference may disappear before the funds arrive at the second exchange. Exchange-specific risks include the possibility of an exchange halting withdrawals, experiencing technical difficulties, or having insufficient liquidity to complete the trade.

Additionally, traders must account for withdrawal and trading fees on both exchanges, which can impact profitability.

- [What Are the Risks Associated with Flash Loan Arbitrage?](https://learn.greeks.live/path/what-are-the-risks-associated-with-flash-loan-arbitrage/)

- [Why Is Triangular Arbitrage Considered Less Risky than Cross-Exchange Arbitrage?](https://learn.greeks.live/path/why-is-triangular-arbitrage-considered-less-risky-than-cross-exchange-arbitrage/)

- [What Are the Operational Risks Associated with Managing Multiple Keys in a Multisig Setup?](https://learn.greeks.live/path/what-are-the-operational-risks-associated-with-managing-multiple-keys-in-a-multisig-setup/)

- [What Are the Counterparty Risks Associated with Using Decentralized Derivatives Platforms for Hedging Impermanent Loss?](https://learn.greeks.live/path/what-are-the-counterparty-risks-associated-with-using-decentralized-derivatives-platforms-for-hedging-impermanent-loss/)

- [Does Transaction Malleability Affect the Validity of the Underlying Transfer of Value?](https://learn.greeks.live/path/does-transaction-malleability-affect-the-validity-of-the-underlying-transfer-of-value/)

- [How Does the Legal Concept of Ownership Transfer Apply to a Tokenized Asset?](https://learn.greeks.live/path/how-does-the-legal-concept-of-ownership-transfer-apply-to-a-tokenized-asset/)

- [What Are the Risks Associated with Providing Single-Sided Liquidity in Certain AMM Designs?](https://learn.greeks.live/path/what-are-the-risks-associated-with-providing-single-sided-liquidity-in-certain-amm-designs/)

- [What Are the Primary Risks Associated with Cross-Exchange (Spatial) Arbitrage?](https://learn.greeks.live/path/what-are-the-primary-risks-associated-with-cross-exchange-spatial-arbitrage/)

## Glossar

### [Insufficient Liquidity](https://learn.greeks.live/area/insufficient-liquidity/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Liquidation ⎊ Insufficient liquidity within cryptocurrency derivatives, particularly options, presents a heightened risk of forced liquidation, especially during periods of rapid price volatility or unexpected market shocks.

### [Execution Risk](https://learn.greeks.live/area/execution-risk/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Exposure ⎊ The inherent risk in cryptocurrency derivatives and options trading stems from the potential for adverse outcomes during the execution phase, particularly given the unique characteristics of these markets.

### [Trading Fees](https://learn.greeks.live/area/trading-fees/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Cost ⎊ Trading fees represent a quantifiable deduction from capital employed in executing strategies across cryptocurrency, options, and derivative markets, directly impacting net profitability and risk-adjusted returns.

### [Transfer Delays](https://learn.greeks.live/area/transfer-delays/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Latency ⎊ Transfer delays within cryptocurrency, options, and derivatives markets represent the time elapsed between trade initiation and execution confirmation, critically impacting arbitrage opportunities and overall market efficiency.

### [Withdrawal Limits](https://learn.greeks.live/area/withdrawal-limits/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Constraint ⎊ Withdrawal limits, across cryptocurrency exchanges, options platforms, and derivative markets, represent pre-defined boundaries on the amount of funds a user can withdraw within a specific timeframe.

## Discover More

### [How Do CCPs Manage the Risks Associated with Non-Cash Collateral Posted as Margin?](https://learn.greeks.live/path/how-do-ccps-manage-the-risks-associated-with-non-cash-collateral-posted-as-margin/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Do CCPs Manage the Risks Associated with Non-Cash Collateral Posted as Margin?](https://learn.greeks.live/wp-content/uploads/2025/10/Layered-Digital-Asset-Structure-Illustrating-Collateral-Tranches-in-Decentralized-Finance-Options-Protocols.webp)

CCPs manage non-cash collateral risk by applying valuation haircuts and setting concentration limits on acceptable assets.

### [What Are the Risks Associated with Holding non-US Dollar Assets in a USD Stablecoin Reserve?](https://learn.greeks.live/path/what-are-the-risks-associated-with-holding-non-us-dollar-assets-in-a-usd-stablecoin-reserve/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Are the Risks Associated with Holding non-US Dollar Assets in a USD Stablecoin Reserve?](https://learn.greeks.live/wp-content/uploads/2025/10/Stochastic-Volatility-Surface-Mapping-Across-Decentralized-Exchange-Hedging-Mechanisms.webp)

Foreign exchange (FX) risk; if the non-USD asset depreciates against the US Dollar, the reserve's dollar value drops, threatening the 1:1 peg.

### [What Are the Main Risks Associated with a Basis Trade Arbitrage?](https://learn.greeks.live/path/what-are-the-main-risks-associated-with-a-basis-trade-arbitrage/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Are the Main Risks Associated with a Basis Trade Arbitrage?](https://learn.greeks.live/wp-content/uploads/2025/10/Transparent-Algorithmic-Sphere-Traversing-Sloped-Decentralized-Exchange-Execution-Rails.webp)

Basis risk (spread widening), funding risk (unfavorable funding rate), and liquidity risk (slippage on trade execution).

### [What Are the Key Risks Associated with Deploying Complex Financial Smart Contracts?](https://learn.greeks.live/path/what-are-the-key-risks-associated-with-deploying-complex-financial-smart-contracts/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Are the Key Risks Associated with Deploying Complex Financial Smart Contracts?](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Autonomous-Organization-Governance-Mechanism-Indicating-Complex-Financial-Derivative-Settlement-Architecture.webp)

Coding errors (bugs), oracle manipulation, legal enforceability uncertainty, and increased complexity of financial logic leading to exploits.

### [What Risks Are Associated with Holding Stablecoins during a Systemic Crisis?](https://learn.greeks.live/path/what-risks-are-associated-with-holding-stablecoins-during-a-systemic-crisis/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Risks Are Associated with Holding Stablecoins during a Systemic Crisis?](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Autonomous-Organization-Structure-Visualization-Intersecting-Digital-Asset-Underlay-and-Quantum-Computing-Driven-Derivatives-Engine.webp)

Depegging risk, counterparty risk (for centralized), and mechanism failure risk (for algorithmic).

### [What Are the Risks Associated with Investing in Rebase Tokens?](https://learn.greeks.live/path/what-are-the-risks-associated-with-investing-in-rebase-tokens/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Are the Risks Associated with Investing in Rebase Tokens?](https://learn.greeks.live/wp-content/uploads/2025/10/Microscopic-Examination-of-Electromechanical-Actuator-Assembly-Interface-for-Decentralized-Finance-Protocol-Mechanics.webp)

The main risk is a "death spiral" of negative rebases, plus complex mechanics and smart contract vulnerabilities.

### [What Are the Security Risks Associated with Smart Contract-Based Derivatives Settlement?](https://learn.greeks.live/path/what-are-the-security-risks-associated-with-smart-contract-based-derivatives-settlement/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Are the Security Risks Associated with Smart Contract-Based Derivatives Settlement?](https://learn.greeks.live/wp-content/uploads/2025/10/Futuristic-Digital-Asset-Custody-Sphere-Integrated-with-High-Velocity-Asymmetric-Vehicle-Aerodynamics.webp)

Coding bugs, oracle manipulation (incorrect data feed), and governance/key management risks are the primary security concerns.

### [What Are the Primary Risks of Using Flash Loans for Arbitrage?](https://learn.greeks.live/path/what-are-the-primary-risks-of-using-flash-loans-for-arbitrage/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Are the Primary Risks of Using Flash Loans for Arbitrage?](https://learn.greeks.live/wp-content/uploads/2025/10/Metallic-Instrument-Precision-Balancing-Crystalline-Sphere-Over-DeFi-Protocol-Interfaces.webp)

The main risks are losing funds to buggy smart contracts or the arbitrage failing mid-trade, costing you gas fees for nothing.

### [What Are the Counterparty Risks Associated with Over-the-Counter (OTC) Hashrate Derivative Contracts?](https://learn.greeks.live/path/what-are-the-counterparty-risks-associated-with-over-the-counter-otc-hashrate-derivative-contracts/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Are the Counterparty Risks Associated with Over-the-Counter (OTC) Hashrate Derivative Contracts?](https://learn.greeks.live/wp-content/uploads/2025/10/Close-Up-View-Of-Central-Hinge-Mechanism-Reflecting-Market-Volatility-Surface-Geometry.webp)

OTC contracts lack a central clearing house, exposing participants to the risk that the counterparty may default on their financial obligations.

---

## Raw Schema Data

```json
{
    "@context": "https://schema.org",
    "@type": "BreadcrumbList",
    "itemListElement": [
        {
            "@type": "ListItem",
            "position": 1,
            "name": "Home",
            "item": "https://learn.greeks.live"
        },
        {
            "@type": "ListItem",
            "position": 2,
            "name": "Path",
            "item": "https://learn.greeks.live/path/"
        },
        {
            "@type": "ListItem",
            "position": 3,
            "name": "What Are the Risks Associated with Cross-Exchange Arbitrage?",
            "item": "https://learn.greeks.live/path/what-are-the-risks-associated-with-cross-exchange-arbitrage/"
        }
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "Article",
    "mainEntityOfPage": {
        "@type": "WebPage",
        "@id": "https://learn.greeks.live/learn/what-are-the-risks-associated-with-cross-exchange-arbitrage/"
    },
    "headline": "What Are the Risks Associated with Cross-Exchange Arbitrage? \u238a Path",
    "description": "Cross-exchange arbitrage risks price shifts, transfer delays, and exchange failures. \u238a Path",
    "url": "https://learn.greeks.live/learn/what-are-the-risks-associated-with-cross-exchange-arbitrage/",
    "author": {
        "@type": "Person",
        "name": "Greeks.live",
        "url": "https://learn.greeks.live/author/greeks-live/"
    },
    "datePublished": "2025-12-05T11:38:13+00:00",
    "dateModified": "2025-12-05T11:38:13+00:00",
    "publisher": {
        "@type": "Organization",
        "name": "Greeks.live"
    },
    "articleSection": [
        "Path"
    ],
    "image": {
        "@type": "ImageObject",
        "url": "https://learn.greeks.live/wp-content/uploads/2025/10/Crystalline-Cross-Hatching-of-Cross-Margined-Synthetic-Collateral-Instruments-Under-Black-Background-Illumination.jpg",
        "caption": "Two pairs of elongated, translucent, rod-like instruments cross centrally displaying faint colorations of pale yellow amber deep blue and pale green against a stark black void highlighted by soft cyan backlighting on the upper left quadrant. These intersecting forms evoke the complex structural geometry of perpetual swaps utilized in high-frequency crypto trading environments or the interlocking nature of multi-asset collateral pools. This visualization represents the abstract topology of digital asset derivatives where assets like wrapped Bitcoin or stablecoins underpin contingent claims. Specific expert nomenclature applicable here includes volatility surface mapping tranche tranching mechanisms counterparty risk exposure within decentralized autonomous organizations DAO governance frameworks and the need for robust liquidation engines preventing cascade failures. The composition reflects the delicate balance maintained across interconnected yield farming strategies demanding precise management of delta hedging ratios and slippage tolerances inherent in exotic option pricing models relying on Black Scholes modifications adapted for non-Gaussian crypto returns."
    }
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "WebSite",
    "url": "https://learn.greeks.live/",
    "potentialAction": {
        "@type": "SearchAction",
        "target": "https://learn.greeks.live/?s=search_term_string",
        "query-input": "required name=search_term_string"
    }
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "WebPage",
    "@id": "https://learn.greeks.live/path/what-are-the-risks-associated-with-cross-exchange-arbitrage/",
    "mentions": [
        {
            "@type": "DefinedTerm",
            "name": "Insufficient Liquidity",
            "url": "https://learn.greeks.live/area/insufficient-liquidity/",
            "description": "Liquidation \u238a Insufficient liquidity within cryptocurrency derivatives, particularly options, presents a heightened risk of forced liquidation, especially during periods of rapid price volatility or unexpected market shocks."
        },
        {
            "@type": "DefinedTerm",
            "name": "Execution Risk",
            "url": "https://learn.greeks.live/area/execution-risk/",
            "description": "Exposure \u238a The inherent risk in cryptocurrency derivatives and options trading stems from the potential for adverse outcomes during the execution phase, particularly given the unique characteristics of these markets."
        },
        {
            "@type": "DefinedTerm",
            "name": "Trading Fees",
            "url": "https://learn.greeks.live/area/trading-fees/",
            "description": "Cost \u238a Trading fees represent a quantifiable deduction from capital employed in executing strategies across cryptocurrency, options, and derivative markets, directly impacting net profitability and risk-adjusted returns."
        },
        {
            "@type": "DefinedTerm",
            "name": "Transfer Delays",
            "url": "https://learn.greeks.live/area/transfer-delays/",
            "description": "Latency \u238a Transfer delays within cryptocurrency, options, and derivatives markets represent the time elapsed between trade initiation and execution confirmation, critically impacting arbitrage opportunities and overall market efficiency."
        },
        {
            "@type": "DefinedTerm",
            "name": "Withdrawal Limits",
            "url": "https://learn.greeks.live/area/withdrawal-limits/",
            "description": "Constraint \u238a Withdrawal limits, across cryptocurrency exchanges, options platforms, and derivative markets, represent pre-defined boundaries on the amount of funds a user can withdraw within a specific timeframe."
        }
    ]
}
```


---

**Original URL:** https://learn.greeks.live/learn/what-are-the-risks-associated-with-cross-exchange-arbitrage/
