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April 28, 2017, 02:05:17 AM |
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One week has passed since bitcoin exchange Bitfinex announced issues with banking partners and halted fiat withdrawals for its customers. Since then the price of bitcoin has been rallying upwards reaching new highs across global exchanges. As the price surges, Bitfinex prices have been $100 higher than at other exchanges, making traders worrisome a bubble is forming.
Bitfinex Price Spread Causing Fear and Uncertainty
Bitfinex Price Spreads Bring Uncertainty to Bitcoin's Price Rally Everybody loves a good bull run, but this particular bitcoin price spike is being seen as unusual. The reason being one of the largest cryptocurrency exchanges has halted USD withdrawals and other fiat currencies until further notice. There was no adverse market reaction to the news, and Bitfinex prices began rising higher than every other exchange. At the time of writing the price per BTC on Bitfinex is $1405 but the price on Bitstamp is only $1306. This price spread has provoked fear and uncertainty among traders due to similar instances in the past.
Traders don’t feel confident in the market because of the 2013 Mt Gox scandal which shook the bitcoin community to the core. For instance in September of 2013 Forbes columnist Donald Marron wrote an article that is eerily similar the current price spike called “How Bitcoin Spreads Violate a Fundamental Economic Law.” Marron notes that Mt Gox started having some price fluctuations when the exchange had issues with Wells Fargo and Dwolla. Price spreads began to happen slightly then picked up when Mt Gox suspended USD withdrawals.
“Spreads briefly normalized until Mt Gox announced that it was suspending U.S. dollar withdrawals,” the author writes.
Mt Gox had become a Roach Motel (or, if you prefer, a Hotel California) for U.S. dollars. Traders could check their dollars in, but they couldn’t check them out.
read more:https://news.bitcoin.com/uncertainty-surrounds-bitcoin-rally-bitfinex-price-spreads/
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