Historically, there has always been a slight difference in the trading price of Bitcoin on various exchanges. However, throughout the last month, this difference became more and more visible when looking at Bitcoin price on Bitfinex and on other exchanges. Following the latest Bitcoin leg up, nevertheless, this difference is now shrinking away.
Bitfinex Bitcoin Premium Down to About 1.5 Percent
As Cryptopotato reported earlier today, Bitcoin skyrocketed in price, reaching $6,300 throughout the day and is up over $1,000 in the last 7 days alone.
Following the latest surge, we can also see that the premium for buying Bitcoin on popular cryptocurrency exchange Bitfinex is shrinking and is already only around 1.5 percent.
For comparison, the premium was even high as 6% just two weeks ago after the cryptocurrency exchange was served with a court order from the New York Attorney General, alleging a cover-up of $850 million loss.
As seen on the chart above, after April 26th, there was a serious discrepancy between the price of Bitcoin on Bitfinex and on other major exchanges.
Perhaps one of the best explanations to this was the fact that people were buying Bitcoin as a means of getting out of the exchange following the turmoil after the NYAG court order. In other words, it’s easier for people to buy and withdraw Bitcoin compared to other currencies, hence driving its price higher.
Why Is The Premium Shrinking?
There can’t be a one-off answer to that question and there certainly are numerous reasons for it. First off, it’s only logical that the newfound price volatility which caused Bitcoin to surge over the past few days will eventually even up its cost throughout different exchanges because the increasing demand across the board is weighing in.
BitFinex Reports On Over $400M Gross Profits
On another note, it could also be the fact that people might feel more confident in Bitfinex and don’t urge to leave the exchange. Just yesterday, May 9th, Bloomberg reported that Bitfinex has managed to net a profit of $404 million on their $418.2 million gross profit, which suggests a 97 percent net profit margin, which is somewhat impressive, if true.
In any case, it’s worth noting that Bitcoin is performing splendidly throughout the entire year, almost doubling up in price. This has caused many, including prominent investor Mike Novogratz, to believe that we are already seeing 2019’s bull run.