Bitcoin is at a ~$40 premium on Bitfinex and Binance compared to Coinbase and other exchanges when previously they were at roughly the same price.
The premium, which developed this week, has one bitcoin at $6,580 on Bitfinex and Binance, while on Coinbase it stands at $6,540.
The reason for it is unclear and remains a bit of a mystery, but some suggest it might be related to tether following rumors that tether’s bank is nearly insolvent.
Bloomberg then reported that Tether and Bitfinex had left Noble Bank International, which is now looking for a buyer. Leaving open the question of who exactly is now providing Tether and Bitfinex with banking services.
Something which they might not want to reveal publicly as they are under a banking blockade of sorts, but this tether theory has one contradictory fact.
Bitcoin’s price on OKEx, which uses USDT for bitcoin trading, does have a slight premium over Coinbase but only by ~$10. BitMex is almost at the same price as Coinbase.
It thus appears unlikely this is tether related as the premium would have roughly been the same across tether exchanges. Moreover, tether’s peg to the dollar is still at a fairly flat line of about $1.
It appears instead this premium is coming from South Korea, with Bihumb’s bitcoin price currently standing higher than even Bitfinex or Binance.
Likewise, Upbit’s bitcoin price in South Korean money currently stands at a premium of almost $100, far more than other “proper” top exchanges.
Bithumb is currently leading trading volumes for bitcoin, with arbitrage there difficult because you have to be a South Korean resident to trade on South Korean exchanges.
It appears, however, some sort of arbitrage is going on through Bitfinex and Binance, probably through some crypto.
Yet when we look at eth, there is no premium and Bithumb is almost no where to be seen. Same for Bitcoin Cash or XRP, LTX or ETC.
Our theory therefore is they are using USDT somehow, increasing buying pressure on mainly crypto to crypto exchanges like Binance, Bitfinex and OKEx to some extent.
Still, arbitrage between those exchanges and Coinbase, Gemini or Bitstamp would be very easy, especially through eth or some other crypto. Which is why previously these sort of premiums used to develop across the top cryptos rather than just bitcoin.
It so being limited to BTC makes it a bit mysterious, especially when it isn’t on just one exchange but across a number of them without an easy pattern except that South Korea is seeing the biggest premium.
It has only developed recently, so arbitragers have not yet gotten to it. They might not find it easy due to restrictions on South Korean exchanges, but when there’s money to be made, they’ll probably find a way.
Just as South Koreans may do in the other direction after they’ve suddenly seemingly become a bit bullish recently, which may simply be due to markets being markets or perhaps something has developed.
If the latter is the case, we’ll probably find out eventually, with news from Asia generally making its way within about a week.