- No one to blame for the debacle but ourselves because BitMEX has “no interest in actually providing a functioning platform”
- “Is this really what we set out to build? A speculative playground where traders and exchanges are the ones controlling our world” – Melody He, crypto hedge fund founder
One of the worst days of Bitcoin resulted in crypto derivatives exchange BitMEX recording one of its highest liquidations ever.
Once the Bitcoin price broke below $4,800, it was dominated by “cascading liquidations,” becoming its “own monster,” said Ari Paul. This widened the spread between the Bitcoin price on BitMEX, where it found the low at nearly $3,600 and spot exchange where it was around $3,700-$3,850.
As we reported, Sam Bankman-Fried, founder and CEO of competitor exchange FTX accused BitMEX of being responsible for Bitcoin’s violent sell-off. He said the price of bitcoin would have gone to zero if BitMEX hadn’t halted its platform under the pretense of “hardware issue.”
This “hardware issue” was the ”kill switch” like the circuit breaker in the traditional stock markets. “I think it was because their market was out of control. I think they made the right decision,” said pseudonymous trader Lowsrtife.
After they halted trading, the bitcoin price bounced 35% in under 25 minutes.
BitMEX then took over the manual control of the engine to make more “profit” from it and “became very reluctant to sell until the market bounced over 1000 points.”
It’s Our Own Doing
Lowstrife believes BitMEX didn’t cause the dump as such a fall would have happened anyway. But what’s clear is that “the market ceased to operate rationally below $5000.” Because of the panic that began from the broader economic turmoil in a run to cash and liquidity, BitMEX got overloaded but their liquidation engine wasn’t prepared to handle 90% of the long-side getting REKT.
For all of this, the trader said there was no one to blame but yourself because BitMEX has “no interest in actually providing a functioning platform.”
“BitMEX was undoubtedly the biggest bull (not by choice) due to the sheer amount of Long Swaps they inherited from traders who had been liquidated,” said trader with pseudonym Flood (BitMEX).
This move on BitMEX saw the liquidity in options market evaporating and 5% spread on spot markets.
Lowstrife also points out how the insurance fund of BitMEX had 35,508 XBT on March 11, 2020, and 35,210 XBT on March 14 questioning,
“What is the point of the insurance fund if, after the worst & most violent day ever in crypto, none of it was used?”
Now, the industry believes, this is not only the time for the crypto exchanges to look for circuit breakers but also as Melody He, co-founder of the crypto hedge fund, The Spartan Group said,
“After this, we should rethink the crypto financial system – is this really what we set out to build? A speculative playground where traders and exchanges are the ones controlling our world.”