Bitfinex is a cryptocurrency exchange, which also provides margin trading. The leverage ratio may seem low to experienced forex traders, but this is due to wild and unpredictable nature of cryptocurrencies. At the time of writing of this review Bitfinex is the largest Bitcoin exchange, in terms of volume.
The company, security of funds
Bitfinex is operated by iFinex Inc., a Hong Kong based company. Although regulation in the cryptoverse is often times a bit shaky, this company has some history in dealing with the US Commodity Futures Trading Commission (CFTC). Despie claiming they should not fall under any dervatives regulation, Bitfinex did pay a fine to the CFTC rgarding a particular case. Of course, we are talking about the famous hacking scandal.
In August of 2016, Bitcoin worth approximately $72 million was stolen from Bitfinex users, resulting in the second-largest hack in the history of cryptocurrency exchanges. The company reacted accordingly, trying to trace the villains. Simultaneously it issued the so called BFX tokens, to the victims. This represented a pledge by the exchange, to pay back the money, once it has the ability to do so.
An interesting development then followed, as a secondary market for these tokens emerged. Applying a strategy, used by the aptly named “Vulture hedge funds”, the initial bidders were offering 2 cents on the dollar. Obviously the uncertainty regarding the payments was very high, as people were speculating this was the end of Bitfinex. Prices started increasing, with new developments in the story. Eventually the firm paid back the entire debt, at the full promised value (and withdrew all the tokens in the process).
This story raises the credibility of Bitfinex in our eyes. The exchange had a major issue but managed to handle it well.
Important Update: As of November 9 2017, Bitfinex will no longer accept US clients in any form. This is most likely the result of a SEC guideline, which suggests all crypto-exhanges will have to at least be registered in a newly created list.
Trading instruments (cryptocurrencies)
Most of the major coins are being traded at Bitfinex. At the time of writing of this review the list includes: Bitcoin, Ethereum, Litecoin, EOS, OmiseGO, Iota, Ethereum Classic, Zcash, Ripple, Dash, Santiment, and Monero.
Minimum initial deposit
The minimum initial deposit, required by Bitfinex is not specified. Forex traders are used to brokers disclosing this information in advance. Some even use it as a means of attracting new traders, like FXTM, who only require $5 for the creation of a new cent account.
Although small transfers can be made with cryptocurrencies, we suspect there may be a minimum, under which Bitfinex will not accept your transaction.
Bitfinex allows margin trading and short-selling of cryptocurrencies. The maximum leverage is 1 top 3,3. Some of the forex brokers, which provide Bitcoin trading, offer even higher leverage. For instance HYCM has set the cap at 1:10. Of course, you can only trade with cryptocurrencies at most forex brokers, without the ability to actually own and transfer them.
Do keep in mind, market moves in the cryptoverse tend to be very wild. A coin can gain or lose a significant portion of its value, within a day. On the other hand traditional fiat currencies rarely register a daily change of more than 1.5 – 2%. Trading a cryptocurrency with high leverage ratios is one of the riskiest things you could do.
When it comes to fees, charged by Bitfinex they are relatively fair when compared to the competition. In order to give you a better understanding, we have to clarify exactly how they are calculated. Unlike what you may be used to with most forex brokers, fees on crypto-exchanges are charged, based on what type of order you place.
If you buy from the lowest available ask, you are effectively taking away liquidity from the market, which results in you paying the higher “taker fee”. Alternatively, if you place your own bid/ask in the order book, other traders can “aggressively” make a trade with it. This is called providing liquidity, in which case you pay the lower “maker fee”.
The charges at Bitfinex are percentages of the total volume of the transaction. They are 0.20% for the “takers” and 0.10% for the “makers”. Comparing this with the offers provided by forex brokers is quite tricky. You would probably get a slightly lower spread at most brokerages, but you will be trading a Contract For Differance (CFD). This means you will only be speculation on the price of the asset, without actually owning it. We must reiterate, speculative trading of cryptocurrenies can be very risky.
When it comes to short-selling, there are additional borrowing fees, which vary based on Bitfinex’s internal platform’s peer-to-peer financing functionality. A key rule to note, is that when selling short, you can’t borrow more than 70% of your entire position.
Bitfinex provides its services via a web-based platform and a mobile app. Although it doesn’t come near the most popular currency trading platform, MetaTrader4 (MT4), the Bitfinex offering is decent. Charting is provided by TradingView, which means you are getting a solid package, with lots of technical analysis tools, such as indicators, Fibonacci tools, trend-lines and so on.
The order book at Bitfinex is also fully transparent. Although volumes occasionally go down, there is a lot of swift order movement and many transactions in the major currencies. Whether classical tape-reading works, as a predictive technique nowadays is a rather interesting topic in itself, but you can attempt to do it at Bitfinex.
Methods of payment
Funding your account at Bitfinex can be done via multiple cryptocurrencies. Furthermore Bank Transfers are accepted, although they are temporary disabled. It is not clear when and if they will “old fashioned” payments will be accepted. Options such as Credit Card, PayPall or Skrill are also not available, which limits the ability to attract people who are new to the crypto-world.
Bitfinex is one of the major cryptocurrency exchanges. The 2016 hack was a major blow to the company. That being said, they managed to handle the situation as best they could. This is definitely a good exchange for forex traders, willing to venture into the cryptoverse, as the platform feels intuitive. On the other hand one would need to already have a crypto currency wallet in order to make a deposit in the first place. This is a major drawback for the “uninitiated”.
Bitfinex Review Conclusion
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