What Risks Are Associated with Cross-Exchange Crypto Arbitrage?
The primary risks include execution risk, where the second leg of the trade cannot be filled at the expected price due to market movement or slippage. Counterparty risk exists if an exchange defaults or freezes funds.
Withdrawal and deposit delays can cause the opportunity to vanish. Regulatory risk is also present as crypto rules are evolving.
Funds transfer risk is also a factor.
Glossar
Regulatory Risk
Framework ⎊ The evolving regulatory landscape surrounding cryptocurrency, options trading, and financial derivatives presents a complex and dynamic risk profile.
Counterparty Risk
Exposure ⎊ Counterparty risk represents the potential loss incurred when a trading partner defaults on their contractual obligations.
Deposit Delays
Latency ⎊ Deposit delays within cryptocurrency, options, and derivatives markets represent a critical impedance to efficient price discovery and execution, particularly impacting time-sensitive strategies.