Bitfinex Launches ‘New, Improved’ Deposit System Amid Market Chaos

Colin Muller

Bitfinex Bitcoin Premium

Bitfinex exchange today announced an upgrade to its fiat currency deposit system, after causing a stir last week by briefly halting U.S. dollar, GBP, EUR and Japanese Yen deposits.

The company’s “new, improved and increasingly resilient [...] system” was detailed in an official blog post:

  • A user wishing to initiate a fiat deposit on Bitfinex will create a deposit request to signal interest in completing a deposit. Through this deposit request, a user will be able to specify the exact amount and currency which they wish to deposit.
  • Following an account review (which may take up to 48 hours), the user will receive a deposit notification which will include, among other things, bank details specific to the individual’s transaction.
  • The user will be able to initiate the deposit based on the information received through the deposit notification. The deposit will subsequently be processed within 6-10 business days from Bitfinex.

Based on the released information, it seems that Bitfinex users can expect to change the destination of their minimum $10,000 deposits on a fairly regular basis.

At press time, social media is already abuzz in an attempt to come to grips with Bitfinex’s new “system” -- although some are hard pressed to spot the difference from the old system, some are questioning the increased KYC requirements.

The chart below shows that the announcement has already caused a modest drop in the bitcoin price premium on Bitfinex’s exchange, which should be taken as a sign of renewed market stability. A “premium” is when an asset (e.g., bitcoin) is trading at a higher price on one exchange versus another.

As CryptoGlobe reported yesterday, exchanges trading bitcoin against the Tether (USDT) stablecoin saw dramatic price premiums versus exchanges trading bitcoin against genuine U.S. dollars.

Tether is closely affiliated with Bitfinex, the British Virgin Islands-registered companies share a significant proportion of their investors and management. They were both subpoenaed by the U.S. Commodity Futures Trading Commission earlier this year.

Yesterday’s price pumps appears to have begun when Kucoin exchange briefly halted Tether deposits and withdrawals, possibly sparking renewed fears regarding Tether’s solvency. Kucoin’s actions were followed by the fake news that the Binance cryptoasset exchange would delist Tether. CryptoGlobe has compiled a graphical timeline to illustrate yesterday's events.

Bitfinex Bitcoin Premium

As CryptoGlobe reported last week, Bitfinex’s deposit outage coincided with a raft of speculation regarding the company’s financial solvency, after repeatedly procuring and dissolving banking relationships with various banks throughout the year.

Continuing the ongoing saga, Bitfinex was recently reported to have secured new banking relationships with London-based banking giant HSBC, although neither Bitfinex nor HSBC will confirm any such connection.

A Parthian Shot

In concluding today’s upgrade announcement, Bitfinex issued a missive saying they believe:

this system to be significantly more durable in the face of sustained attacks by our competition and their supporters

Such statements resonate with an official blog post put out a week ago by the company, which again addressed its detractors claiming insolvency, saying such criticism was a “targeted campaign”. Bitfinex downplayed rumors of insolvency and seemed to shed any connection with “an entity called Noble Bank”.

CryptoGlobe and many other news outlets recently reported that Puerto Rico-based Noble Bank had had banking relations with Bitfinex and Tether, and that those relations were recently terminated.

“Complications continue to exist for us in the domain of fiat transactions, as they do for most cryptocurrency-related organisations”, the company conceded.

Top-Tier Crypto Exchanges' Volumes Climb Back to One-Third of Total Market Share

The aggregate trading volume of top-tier cryptocurrency exchanges has increased by 61.2% during the month of January, while the volume of lower-tier crypto exchanges increased 46.4%.

According to CryptoCompare’s January 2020 Exchange Review, the trading volume of top-tier crypto exchanges – those rated AA-B according to its Exchange Benchmark – climbed last month to represent 29.3% of the total trading volume in the space.

The rise is significant as in December, the cryptoasset data provider’s report showed top-tier cryptocurrency exchanges were seeing their trading volumes drop as they lost market share to lower-tier crypto exchanges, those rated C-F. At the time, they represented 26.4% of the cryptocurrency market’s total trading volume.

top tier trading volumesSource: CryptoCompare Exchange Review

The report further found that exchanges that charge taker fees represented 76% of the total volume last month, while those that implement the controversial trans-fee mining (TFM) model represented 22%.

It also found that regulated bitcoin derivatives are still dominated by the CME, whose total trading volumes went up 145.6% since December. Grayscale’s Bitcoin Trust product (GBTC) saw its total trading volume rise 131% since December.

As for derivatives trading on cryptocurrency exchanges, in January OKEx represented the majority of daily derivatives volumes, trading $4.96 billion per day and capturing 31.1% of the total market share. Huobi traded $4.29 billion a day for 26.9% of it, while BitMEX traded $3.13 billion for 19.6%.

Pure crypto-to-crypto exchanges notably represented 75.4% of the market’s trading volume, in a similar proportion to the last two months. The stablecoin space, per the report, is still dominated by Tether’s USDT, as it still represents 94% of the total Bitcoin trading volume into the top four stablecoins.

Decentralized Exchanges Lose Trading Volume

CryptoCompare’s report also addresses decentralized cryptocurrency exchanges, noting IDEX was the largest one in January. It traded a total of $10 million as its trading volume went up 25.4%, and it was followed by Switcheo and Bitsquare. While these platforms’ volumes went up, DEXs as a whole have been losing volume.

dex CHARTSource: CryptoCompare Exchange Review

According to the report they have diminished 88% since early 2019 to now represent a small fraction of the global spot exchange volume. In January, decentralized trading platform traded $17.8 million in total, representing 0.003% of the market. In January 2019, for comparison, they traded $148 million.

Featured image via Unsplash.