What is hidden behind the high premium of Bitfinex BTC?

What happened on the Mt.Gox exchange was re-launched on the Bitfinex exchange.

Last week, the Office of the Attorney General of New York called Bitfinex and Tether a black-box operation, stealing funds to fill the vacancy, and handing a complaint to his parent company, iFinex.

This explosive news caused the currency market to tremble. Bitcoin fell sharply and fell below the $5,000 mark in just 30 minutes, a drop of 10%. Investors originally expected the encryption market to be so weak, but did not expect Bitcoin to quickly rebound, re-opening $5,200 and constantly testing the 5300 key support.

(Source: CoinMarketCap)

The problem is that Bitfinex's BTC offer has been a far cry from most cryptocurrency exchanges .

The onion intercepted the BTC price chart on Bitfinex and Coinbase and found that the price of BTC against the US dollar on the Coinbase of today's head cryptocurrency exchange was about $5,179. At the same time, the price of BTC against the US dollar on the Bitfinex platform exceeded $5,500. Bitfinex's BTC premium to Coinbase reached a one-year high .

From the above picture, the BTC quotes of Coinbase and Bitfinex will also vary from time to time. In fact, due to the different transaction volume and supply and demand situation, it is very normal to have some slight price difference between different exchanges. But the difference between Bitfinex and other exchanges is as high as $300 (over 6%), which will inevitably attract market attention, and analysts are beginning to study the reasons behind the huge spreads.

Why is the BTC offer on Bitfinex so high?

Jeff Garzik, co-founder of blockchain technology company Bloq, thinks this is a “spark save” for Bitfinex users. It pointed out that users want to withdraw from the exchange, when the legal currency channel does not work, they have to choose to buy BTC. Therefore, those exchanges that are in crisis are instead BTC offers higher.

This explanation seems to be logical. Bitfinex's current BTC trading volume is actually from investors on the platform, they have to buy BTC through a premium to seek to get out. After all, considering the current crisis of Bitfinex and Tether and its long-suffering “manipulating the market” problem, rational investors may prefer to buy BTC at a premium and also withdraw funds safely from the exchange. This situation is not the first time in the short history of BTC, and the most famous of the exchanges that have staged similar "scripts" is Mt.Gox.

Currently, the BTC spread between Bitfinex and other exchanges is showing signs of further expansion. Although there have been market analysis opinions that the BTC price may fall due to the impact of the Bitfinex event. However, from the current situation, cryptocurrency investors seem to withstand the market bearish pressure and successfully stabilize the BTC price above $5,000.

But here is the world of encryption, and no one can predict what will happen later.

Author: Gu Mengting

Source: Shallot blockchain

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