Bitfinex Falling Below Bitstamp Price Shows Potential Slowdown Of Fiat Into The Exchange

If you are someone who consistently checks the bitcoin price and exchange data like me, you have noticed that the last few months have been abnormal. First we saw bitfinex trading at a large premium when they stopped fiat withdrawals, but now we are seeing the opposite. It seems that bitfinex is trading now lower than exchanges like bitstamp and btc-e which have almost always been the last to move on a price rise. Lets talk about potentially why.

When bitfinex was trading at a large premium earlier this month it was because people were afraid of another gox event happening. They had shut off the flow of fiat withdrawals which spooked people who had money on the exchange. However bitcoin withdrawals were still being processed so people were willing to trade the coins at a $50 premium so they could get off the exchange safely. Many took this opportunity to be ahead of the curve and not risk their entire stash they were trading on bitfinex.

Bitfinex had completely paid off all their debts from the hack, but they were getting hassled from the banks that they had accounts with. Mostly because from reports, countries they were using to circumvent aml and kyc checks started and continue to crack down. This is still going on, but finex proved they had some liquidity by allowing a one time withdrawal for anyone with balances over $40,000, which many took the up on that deal. This was able to semi breach the premium between bitfinex and bitstamp.

So why have things reversed in the recent few days? I have a theory and it mostly revolves around people moving away trust from bitfinex and towards other exchanges. The trust that sizable investors had in bitfinex seems like it might be fading away. The price rise in coins means that there are less people able to afford them in full and those who have cash on the system have the upper hand. I think this may potentially lead to lower volume on bitfinex in the short to medium term.

Whether or not we see the price continue to fall more on finex compared to stamp or btc-e, there is definitely something going on that is lowing bitfinex as a main choice for an exchange. Maybe things will change in the near future, but for the time being bitfinex might need to do more to assure that they are safe and solvent.