BitMEX Trading Volume Way Down After Supports Broken

Colin Muller

Trading volume on BitMEX, the world’s largest - albeit unregulated - cryptocurrency futures exchange has fallen precipitously since last month, when the market broke through critical support levels, according to data from Bitcoinity.org. More than half of liquidity has left the exchange, from about $600 million worth of volume in October-November, to about $200 today - and at one point in the past few weeks falling below $100 million.

bitmexVol.png(source: Bitcoinity.org)

Bitcoin finally broke its key $6,000 support level in mid-November after testing it several times during 2018. This break halved the cryptoasset industry’s total market cap, with it briefly falling below $100 billion.

mc18_12.png(Cryptoasset industry market cap; source: Tradingview.com)

Data from Datamish.com show that, between November 13 to 27 - comprising the time bitcoin's support break occurred and eventually settled near $3,700 - long contracts were severely punished: There were $340 million worth of short contract liquidations versus $2 billion worth of long contract liquidations. One may anecdotally speculate that many bulls left the market after high losses.

(On BitMEX, liquidation occurs when the price action moves against the contract’s direction beyond the Maintenance Margin percentage, and the user’s principal funds are taken in order to cover the costs of the contract. It is BitMEX’s equivalent of a Margin Call - only without the call.)

BitMEX in a Seychell

The unregulated Seychelles-registered exchange, which represents 96% of bitcoin futures trading according to CryptoCompare’s November exchange review, is rather infamous in certain sectors of the cryptoasset community for offering very high leverage to inexperienced retail traders, who may use that function irresponsibly. BitMEX’s CEO Arthur Hayes has referred (in jest) to some users of his platform as “degenerate gamblers.”

BitMEX’s trade volume had been rising dramatically over the course of 2018 - from lows near $50 million - possibly as a hedge against falling prices across the cryptoasset market, because short futures contracts allow profit even as prices fall. Most of that activity appears to have been reset now.

bitmexVol2.png(source: Bitcoinity.org)

The loss in volume on BitMEX may not be so bad for the markets. CryptoGlobe recently reported on research that indicates a potential benefit to more tepid markets with less volume, at least in the case of bitcoin. Less buying and selling could indicate more holders, less selling pressure, and a price bottom to the 2018 bear market.

Winklevoss Twins: Wall Street Has Been “Asleep at the Wheel” Regarding Bitcoin

Michael LaVere
  • Winklevoss Twins say Wall Street has been "asleep at the wheel" in acting on bitcoin.
  • Retail investors hold an advantage over institutions in the crypto marketplace. 

Cameron and Tyler Winklevoss, who founded the cryptocurrency exchange Gemini, said that Wall Street has been “asleep at the wheel,” in regards to bitcoin in their most recent interview. 

Sleeping on Bitcoin

Speaking with CNN Business on Aug. 22, the Winklevoss Twins explained the value of bitcoin as an investment, while giving their opinion on the risks of the cryptocurrency industry in comparison to the traditional financial sector. 

They were also critical of the established market’s slow acceptance of bitcoin and cryptoassets, claiming that Wall Street has fallen behind in that regard. Tyler Winklevoss argued that retail investors have had the edge of institutions in the market of crypto through their willingness to explore the new asset class. 

He continued, 

“Unlike the internet, which you couldn’t buy a piece of, you can actually buy a piece of this new internet of money. It’s still a retail-driven market, from day one [...] and a lot of people have done really well. Wall Street has been asleep at the wheel.”

In addition, the twins claimed not to be deterred by the high price volatility of bitcoin, and said the risk of missing out was much more compelling, 

“We had to invest because we were afraid of missing out, we couldn't miss out on this future.”

The twins also compared bitcoin to gold, which is becoming a more common financial analogy as investors and analysts view BTC as a digital store of value.