Mistake #2 – The “Fake” Profit Trap

The “Fake” Profit Trap

You see a 15% spread in the screener on a Top-100 coin. It looks like the trade of a lifetime, but in 99% of cases such a spread is caused by a technical restriction: one of the exchanges has disabled deposits or withdrawals for that asset.

Reason Behind the Spread

When an exchange disables deposits for a coin, the inflow of new supply stops. If demand rises on that exchange at the same time, the price spikes because arbitrage traders cannot transfer coins from other platforms to “push” the price back down. As a result, the price on Exchange A is $1.20, while on Exchange B it is $1.00 — a 20% spread. However, you cannot profit from it because you won’t be able to transfer the purchased coins.

Risks for Different Strategies

For Spot–Spot Arbitrage:

You buy the coin on Exchange B, but when attempting to withdraw it, you see a “Wallet Maintenance” or “Withdrawal Suspended” notice. As a result, your funds are locked in the asset. While waiting for withdrawals to reopen (which can take from hours to weeks), the coin’s price may drop — forcing you to lock in a loss.

For Spot–Futures and Futures–Futures:

In these strategies, you don’t transfer coins — you hold positions on two exchanges. It may seem like closed deposits are not a problem. That is a mistake.

If deposits are disabled, the market on that exchange becomes “isolated.” The spread may not converge for weeks, or it may start moving against you, leading to funding losses or even liquidation, since natural arbitrage forces cannot balance the price.

Verification Algorithm

Go to the Deposit/Withdrawal section on the exchange where the price differs significantly. Check the network status. If deposits or withdrawals are disabled, investigate the reason before entering the trade.