Arbitrage Opportunity

Definition ∞ An arbitrage opportunity arises when a digital asset exhibits a price discrepancy across different exchanges or markets. Traders exploit these temporary price differences by simultaneously buying an asset in one market and selling it in another. This action aims to secure a risk-free profit from the imbalance. Such opportunities are transient and quickly disappear as market forces adjust.
Context ∞ In cryptocurrency markets, arbitrage opportunities are common due to market fragmentation and varying liquidity across numerous trading platforms. Automated trading bots frequently capitalize on these inefficiencies, leading to rapid price equalization. News articles often discuss the diminishing prevalence of simple arbitrage as market sophistication increases.