There are several major downsides to the ongoing issues affecting so many bitcoin exchanges. Perhaps the biggest problem comes in the form of how the spread between different exchanges continues to widen. That is not a positive development by any means, as it is pushing the bitcoin price upwards to an unsustainable level. This is not the same as the Mt. Gox debacle, although the fallout may be equally severe.
Bitfinex Woes Shake Up Global Bitcoin Prices
Everyone who has looked at bitcoin price charts over the past 48 hours will have noticed something strange is going on. A lot of exchanges are trying to play catch-up with the Bitfinex price, which seemingly inches higher every single minute. That is not entirely surprising since the company is still suffering from blocked USD withdrawals.Moreover, various other exchanges are having USD issues as well, which means users will need to rebuy bitcoin if they want to move funds off these exchanges.
As of right now, the bitcoin price on Bitfinex hovers around US$1316.3, whereas other exchanges list it as US$1,237 and US$1,233 respectively. That means there is a US$80 spread between different exchange traders could take advantage of. Unfortunately, they can’t move fiat out of Bitfinex, which makes it rather difficult to use this arbitrage opportunity. Moreover, Bitfinex doesn’t have the USDT pair listed either, otherwise, it would have been somewhat easier to transfer funds off exchanges.
It has also become evident Bitfinex is starting to have minor issues with outgoing wire transfers denominated in other currencies. HKD and CHF transfers are now becoming a problem as well, although it appears those fiat currency gateways will be shut down soon. Moreover, the company’s banks are not accepting any incoming wire transfers either, which means users need to convert to bitcoin or Ethereum if they want to move funds off the platform.
It is evident this situation cannot be maintained forever. The Bitfinex woes are messing up the overall bitcoin price, as some people continue to buy BTC because of the spread. Once these issues settle and all services are resumed as normal – or Bitfinex collapses, whichever may happen first – there will be a lot of red on the bitcoin charts. Centralized exchanges are a key weakness to bitcoin’s value right now, that much is evident.
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