TL;DR: Leading cryptocurrency price aggregator CoinMarketCap (CMC) appears to be excluding embattled exchange Bitfinex from its weighted average. In recent days, as headlines screamed regarding doubts about the exchange’s ultimate solvency, the price for the world’s number one crypto by market capitalization, bitcoin core (BTC), is trading at a premium over other exchanges.
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CoinMarketCap Excluding Bitfinex in BTC Price
It’s still listed as an exchange on CMC, and the insult is hardly perceptible. Market analyst Curtis Helms was one of the first to notice. Under its Exchanges tab, Adjusted, Bitfinex rests 45th among volume. Click on it proper, and within Active Markets, the BTC/USD pair reveals an asterix, noting a price nearly 6% higher than above other exchanges of similar rank. Bitfinex is excluded from CMC’s calculations for BTC.
Premiums aren’t all that rare, and can often present a nice arbitrage opportunity for traders. The laws of supply and demand are at work, as more dollars are chasing fewer goods/products/coins. Getting in and out of exchanges is a long tradition within investment circles, as financial wizards use various tools at their disposal to leverage whatever advantage possible. Demand, for example, during the late 2017 price runup often saw entire national markets, such as Korea, bidding up spot, sometimes double digits — same for parts of Africa, where the population was willing to pay higher prices to rid themselves of politician-controlled cash in favor of bitcoin.
For Bitifinex, however, the matter is slightly more complicated. Years of rumor and investigations into its rather cozy relationship with stablecoin Tether (USDT) were brought front and center by an aggressive new Attorney General out of New York. The state and exchange traded accusations, and a court order asked for formal steps to be taken in order to cease what regulators fear is Bitfinex and Tether commingling user funds, generous accounting, and a possible solvency gap in the hundreds of millions.
It very well could be users on the exchange are attempting to exit positions. A perfect storm of BTC experiencing runup across other exchanges at the moment combined with Bitfinex users trying to get out means a healthy number are willing to pay more in anticipation of a possible worse fate. Essentially, the dominant theory is worry about the exchange’s ability to cover withdrawal in fiat, through avenues such as USDT, is causing more users to move into BTC as a result. So far, however, the overall price of BTC, and even USDT, have remained rather resilient, as some analysts are suggesting CMC’s exclusion is a deeper sign many are ignoring at the moment.
DISCLOSURE: The author holds cryptocurrency as part of his financial portfolio, including BCH.
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