Bitfinex Suspends All Fiat Deposits as Bitcoin Premium Surges Over $100

Omar Faridi

Bitfinex USDT Premium on Bitcoin

Leading cryptocurrency exchange Bitfinex has “temporarily paused” or suspended fiat deposits in USD, Euros, British pounds (GBP), and Japanese yen (JPY). However, screenshots shared by people who trade on the British Virgin Islands-registered exchange appeared to indicate that “things are expected to resume in a week” or “normalize” within that time frame.

These latest banking problems have been reflected in the market's attitude to the exchange in the last few days. Looking at the title chart the bitcoin USD 'risk premium' on Bitfinex has increased to over $100 over other exchanges - market analysts believe this reflects the higher risk of trading on Bitfinex.

CryptoGlobe reached out to Bitfinex to learn more about the situation. The exchange replied:

Bitfinex has temporarily paused the depositing of fiat to customer accounts. We expect full trading capabilities to resume as normal within a week. All other service and business features on the platform remain unaffected and are operating as normal.

Banking Problems

Last week, reports had surfaced that Bitfinex, which operates from Hong Kong, may have been holding a large amount of its funds at Puerto Rico-based Noble bank - now looking for buyers as it is no longer profitable.

Noble bank is reportedly struggling to continue its operations because Bitfinex and Tether (USDT), its former customers, have parted ways with the financial institution. According to TheBlock’s research, Bitfinex had opened its accounts at HSBC, one of the world’s largest financial services organizations.

TheBlock’s researchers revealed that Bitfinex’s private account had been created under the name, Global Trading Solutions. Notably, HSBC might not have known that the account actually belonged to Bitfinex as it was opened under a different name.

Per the crypto analysis website, it “appears that [Bitfinex’s] private account” with HSBC “is no longer functional” and the exchange may not currently have “an active method of deposits as all USD, EUR, JPY and GBP deposits” have been suspended.

As CryptoGlobe reported, the cryptocurrency market experienced a massive selloff on Thursday during which Bitcoin (BTC) dropped over 5% within 30 minutes. The prices of other major digital currencies including Ethereum (ETH), Ripple (XRP), and Bitcoin (BCH) also dropped significantly.

Many market watchers are now wondering whether there might be some connection between the sharp decline in cryptocurrency prices and possible issues related to Bitfinex’s recent operations.

As CryptoGlobe covered, Bitfinex had responded to allegations (on October 7th) that it was either becoming, or was now, insolvent. Medium blogger ProofOfResearch had noted that his investigation of the exchange’s operations indicate that “Bitfinex is no longer solvent.”

Bloomberg also reported:

Noble Bank attracted attention in cryptocurrency circles earlier this year because of its willingness to work with Tether and Bitfinex, which was dumped last year by Wells Fargo & Co.

Meanwhile, many other market analysts suggested that there may be links to Tether’s recent issues, however, Bitfinex dismissed these allegations by stating people have "little understanding of what [insolvent] means and what they are generally talking about."

Bloomberg Intelligence: Bitcoin Price Could Fall as Low As $1,500

Siamak Masnavi

"Bitcoin's no longer boring," Bloomberg declared on 16 November 2018, at the end of a week that saw Bitcoin mostly lose its recent image as a "stablecoin" as the result of a dramatic drop in price on November 14th, the day before Bitcoin Cash's hard fork.

BTC 2 Week Chart - 18 Nov 2018.png

Analysts at Bloomberg Intelligence, Bloomberg’s research arm on the Bloomberg Terminal, "predict the price could fall to $1,500," which suggests that the Bitcoin price could fall more than 73% from its current level (at press time, according to data from CryptoCompare, Bitcoin is trading at $5,593, up 0.81% in the past 24-hour period).

On Wedneday, the BTC price, which was around $6,369 at 06:00 UTC, had plunged more than 12% by 20:00 UTC (when BTC was trading around $5,569), to reach its lowest level in over a year. The altcoins with the exception of the stablecoins (excluding USDT) were not doing any better, with most of the top 20 cryptoassets suffering double-digit percentage drops.

On November 15th, as covered here, CNBC referred to the bloodbath in the crypto markets as "Crypto Meltdown," with Fast Money Trader Brian Kelly, who is the founder and CEO of crypto investment firm BKCM, blaming the nervousness in the crypto markets on the uncertainly caused by the "Bitcoin Cash Civil War" (the fight between the two competing implementations of Bitcoin Cash, Bitcoin ABC and Bitcoin SV, to claim the title of the real/true Bitcoin Cash). Others were blaming the drop in Bitcoin's price on the lowering of Bitcoin's hash rate as the result of some Bitcoin mining pools supporting the ABC camp, such as Roger Ver's, switching their attention temporarily from Bitcoin to Bitcoin Cash.

Travis Kling, the Founder and Chief Investment Officer of cryptoasset management firm Ikigai, told Bloomberg on November 15th:

"I didn’t sleep well last night. There’s a small chance that, it’s difficult to estimate, that something really bad could happen related to Bitcoin Cash that could then impact the entire crypto market."

Mike McGlone, a Senior Commodity Strategist at Bloomberg Intelligence, warned that the bear market would not be over anytime soon:

"[The slump] was sparked by the pump for the Bitcoin Cash hard fork. That pump that began a few weeks ago, got the market a bit too offsides with speculative longs playing for the good-old days. But this is an enduring bear market."

On November 16th, McGlone tweeted:

Although, thankfully, not all market analysts are as bearish as those at Bloomberg intelligence, even legendary Bitcoin bull Thomas Lee, who is the co-founder (and Head of Research) of independent research boutique Fundstrat Global Advisors, is feeling quite a bit less bullish on Bitcoin these days. Lee, who had lowered his year-end price target for Bitcoin from $25,000 to $22,000 on July 5th, in a note to clients on November 16th, lowered his estimate again, this time from $22,000 to $15,000.

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