Cryptofinancial Impact: Bitfinex News
Financial & Sentiment Analysis
Using Inca’s Cryptofinancial data platform, NTerminal, I investigated the recent Bitfinex/Tether news and its impact on the ecosystem.
The New York Attorney General, Letitia James, announced her court order against iFinex Inc. (the stable coin issuer of Tether Limited, and owner of Bitfinex), adding to the growing pile of concerning activity associated with Tether and Bitfinex.
Tether (USDT)
As this news broke, there was a rush of customers to move funds off the exchange and out from Tether, causing the price of USDT to drop relative to the USD.
Bitcoin (BTC)
The bitcoin market predictably responded to this activity by quickly turning bearish (as can be seen below). Interestingly, after the price of BTC rebounded, a significant price difference between Bitfinex and all other major exchanges was observed. Since emerging, this price difference continued over the past few days. There seem to be two obvious contributing factors to this phenomena:
- The drop in USDT below the USD makes any exchanges that trade USDT/BTC pairs to have automatically inflated BTC prices. Some data aggregators assume that USDT pairings are equivalent to USD pairings when comparing prices across exchanges.
- Many analysts are asserting that this effect is primarily due to the extreme exit buying pressure; it makes sense that traders are buying BTC to move from the exchange rather than withdrawing via fiat, which could have significant delays.
Sentiment Analysis
I Indexed all social and traditional media events as well as regulatory events in NTerminal that mentioned Bitfinex. By running them through our natural language processing module, we can sort them by sentiment. Charting the number of Negative, Neutral, and Positive mentions over time elucidates the subsequent spike of negative attention on April 26th.
