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.

Altcoins Might Surge, As Bitcoin Dominance Drops Below 30%, Prominent Analyst Predicts

  • Bitcoin dominance, or BTC's share of the total crypto market cap, could drop below 30% - analyst argues.
  • Altcoins might surge if their market cap surpasses $61 billion (which has already happened).

Galaxy (@galaxybtc), a widely-followed cryptocurrency analyst on “Crypto Twitter”, recently noted that he thinks bitcoin’s (BTC) market dominance might fall below 30%.

Available data shows that bitcoin dominance, which represents the cryptocurrency’s share of the larger digital asset market, stands at approximately 51.5%. However, Galaxy believes that the relatively recent “build-up [of] BTC dominance” during the prolonged bear market will eventually result in a “breakdown.”

He added that the breakdown of bitcoin’s dominance will be followed by “altseason” - during which some of the smaller market cap coins will experience substantial gains in their value. According to his analysis, “the weaker the dominance uptrend, the longer the altseason and so far this one is the weakest.”

Bitcoin Dominance To Fall Below 30%?

While predicting that BTC dominance will fall below 30% in the near-term, Galaxy believes the crypto market might also experience “the longest altseason” in its 10-year history. Per Galaxy’s assessment, if the total market cap of all other cryptoassets (excluding bitcoin) surpasses $61 billion (which has already happened), then it’s quite likely that the prices of altcoins will increase significantly from their current levels.

Commenting on the recent surge in cryptocurrency prices, Naeem Aslam, a national award winning financial news writer, published a post on Forbes in which he wrote that bitcoin may have been “oversold.” Aslam argued that most analysts expected that bitcoin’s “five consecutive months of losses” would not “last forever.”

He added that if the bitcoin price manages to stay about $3,405, then it’s likely “the sell-off pressure” will begin to “ease-off.” Hopefully, this “encourages” more new investors to enter the volatile cryptoasset market, Aslam wrote.

Crypto Fundamentals May Continue To Improve

Aslam, who has been an active forex trader for the past 10 years and delivers lectures at the London School of Economics, mentioned that the digital asset industry’s “fundamentals are likely to improve” in the next few months. He also expects increases in the “transaction volume for on-chain transactions.” Should this happen, Aslam believes it will “attract growth” because it could encourage more professionals from different industries to begin working on improving crypto-related “infrastructure.”

While discussing the price of Ethereum’s native token, Ether (ETH), Aslam pointed out that the world’s second largest cryptocurrency has managed to “stay above the critical mark of $100.” According to Aslam, this is a key support level for ether as the “recent low of $100 [set on February 6th) was much higher than the previous low of $80 (set on December 14th).” This price trend for ETH indicates that the ETH price may potentially increase further, Aslam noted.