@warning2
Arbitrage opportunities arise when a cryptocurrency is priced differently across various exchanges, allowing traders to profit from buying low on one exchange and selling high on another. These opportunities help to align prices across markets, contributing to greater price efficiency over time. As arbitrageurs take advantage of these price differences, they quickly narrow the gap, ensuring that the price of the cryptocurrency converges to a fair market value. However, the speed of these trades often requires sophisticated algorithms and can lead to higher market volatility in the short term. While arbitrage helps with market efficiency, it can also highlight inefficiencies and delays in liquidity across different exchanges.
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