BitMEX Insurance Fund Up Over 50% Since The Start Of The Year, Now Worth North of $300 Million
The industry news outlet, The Block Crypto has noticed that the BitMEX Insurance Fund has increased to holding over 31,300 bitcoins or approximately $314 million. Notably, the increase has been for about 50.7% since what it was at the beginning of the year.
The exchange that accounts for the highest amount of Bitcoin trading of more than 6 percent uses an Insurance Fund to avoid auto-deleveraging in traders’ positions. The fund as explained by the exchange is used to aggress the unfilled liquidation order before they are even taken over by the auto-deleveraging system.
BitMEX offers an attractive proposition to clients: a capped downside and unlimited upside on a highly volatile asset. They have created a market an insurance fund system that makes sure that winners receive their expected profits. Unlike traditional markets, profit and loss do not reflect the actual price their position was closed.
Given below is the graph of the cumulative balance of the BitMEX Insurance Fund. While BTC dropped down to the bottom the fund keeps on increasing in 2018, as a matter of fact, during the last months of 2018 when Bitcoin crashed from $6k to $3,150, the insurance fund took a rather bigger rise and is still not stopping. However, since then the curve corresponds to the price of BTC.
Earlier this year, BitMEX Research released a blog explaining BitMEX Insurance Fund. The first thing that they mention is that when investors trade on derivatives exchanges such as BitMEX, users are not trading against the platform. They are just a company that allows individuals to exchange derivatives contracts with other third parties.