Bitfinex Review

Website : Bitfinex.com
Established : 2011
Country : Hong Kong
U.S. Clients Allowed : No

Bitfinex is the biggest exchange in the world by volume. From mid-April to mid-October 2017, 5.77 million bitcoins traded through Bitfinex, which is near twice the volume of the company’s nearest competitors, such as Kraken (3.65 million bitcoins) and Coinbase (3.06 million bitcoins).

High volume is essential for traders as it guarantees a low spread (the difference between the best bid and ask prices.)

So if Bitfinex has to be the best exchange if it is the biggest right?  Well…

Bitfinex Difficulties

It’s no longer news that Bitfinex has had its share of difficulties.

The April 2016 theft of almost 120,000 bitcoins from Bitfinex holds as the second-largest Bitcoin heist in history, overshadowed only by the loss of about 750,000 bitcoins by Mt. Gox.

The key distinction between Bitfinex and Mt, Gox is that Bitfinex made its customers whole. Even though not all accounts were affected, the company decided to spread the loss among all its customers; all clients took 36% “haircuts” on their account balances. All customers— at least those who’d kept their BFX tokens, which served s IOUs from Bitfinex, were fully repaid a year later.

The dilemmas didn’t stop there for Bitfinex. The firm’s bank accounts were frozen by Wells Fargo, its correspondent bank in April 2017. This circumstance lasted for weeks, leading to customer complaints and all kinds of perversions in the company’s pricing.

Normal service was finally restored—although Bitfinex no longer accepts United States customers and US dollars due to these banking problems.

This implies that at the moment, there’s no way to deposit fiat currency into your Bitfinex account.

Advanced Trading Features

Bitfinex offers a customizable GUI, advanced functionality, more than 50 trading pairs (e.g., BTC/ETH, BTC/XPR), and numerous order types, like limit, market stop, fill or kill, stop-limit, trailing stop, and scaled orders. These functionalities blend to make it a favorite exchange with more experienced digital currency traders.

Currency Support and Fees

Technically, Bitfinex is an all-crypto exchange at the moment.

However, Bitfinex does support Tether (USDT), the quasi-fiat token unofficially linked to the USD’s price. Bitfinex is indeed a significant shareholder in Tether and is presumably the majority holder of these quasi-fiat tokens.

While traders find the Tether very useful, it remains susceptible to critical regulatory risk, being as stable in price as the US dollar without the associated downsides of expensive and slow international transfer times.

There are free deposits and relatively cheap withdrawals for Bitcoin and these ICO tokens and altcoins: Ethereum, Zcash, Monero, Litecoin, Dash, Ripple, Iota, Ethereum Classic, EOS, Santiment, OmiseGO, Bitcoin Gold, Bcash, NEO, Metaverse ETP, Qtum, Aventus, and EDO.

Markets and Services

Apart from providing around 51 currency pairs for a diversity of currency pairs (for a reasonable maximum maker fee of 0.1% or taker fee of 0.2%), Bitfinex also gives markets for so-called CSTs (Chain Split Tokens). These provide a way for Bitcoin users to make speculative tradings about the success of future attempts at hard forks, like SegWit2x.

For those who want to privately trade substantial sums (100,000 dollars and above) of digital assets, Bitfinex offers an over-the-counter (OTC) trading environment. This service matches, and likely secures significant private trades.

Margin trading and margin funding

Margin trading typically increases a trader’s market exposure through leverage, whereby a 10 dollars move in the price of Bitcoin at 10x leverage would result lead to a 100 dollar gain or loss. Bitfinex provides a maximum of 3.3x leverage.

Margin funding lets users lend liquidity to margin traders in return for daily interest fees.

Buying Limits

It may be concluded that there is no buying limit beyond market supply, as Bitfinex lists a taker fee of 0.1% for those who trade 30 million dollars or higher per month.

Privacy

For Tether usage and facilitated cryptocurrency withdrawals, Bitfinex requires verification. The company, however, remains utterly usable for those who do not wish to give more than an email address. Bitfinex also grants direct access through a Tor cryptic service.

Conclusion

Bitfinex is not for you if you a new entrant in the cryptocurrency space looking to get your first digital assets. It is not possible to buy digital currencies with regular money due to lack of fiat funding options. Even if you do succeed in funding your account, the not-so-straightforward interface will undoubtedly take time to master and will make costly errors more possible. New entrants are advised to go with a more straightforward exchange platform that provides a diversity of popular payment options.

However, if you’re a seasoned digital currency trader, Bitfinex probably provides everything you need and more. The main draw is apparently the platform’s high Bitcoin and Ethereum liquidity, but its leverage, multiple order types, and margin funding give a lot of flexibility.

Ricardo Martinez

Ricardo Martinez

Ricardo Martinez has been active in the financial markets for around 10 years. In the early days in his career he was a trader and worked as market analyst in different online brokers advising clients on key decisions of trading instruments in foreign exchange and commodity markets. Ricardo is currently working as independent trader with diversified portfolio over different markets. His writing for LearnMarketonline is part of his commitment to share knowledge with traders.