According to data, the once industry leader has been on a downward trajectory ever since the Black Thursday collapse that not only crushed Bitcoin prices, but may have put a permanent stain on the reputation of the top dog.
BitMEX Open Interest Drops By 68% Data Shows, Is the King of Bitcoin Margin Trading In Trouble?
The leading cryptocurrency by market cap, Bitcoin, was trading well above $10,000 at the start of the year, but failed to incite further FOMO, and the price reversed.
On the way down, coronavirus fears spun out of control, causing a historical selloff across all assets on a day now forever referred to as Black Thursday.
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Stock markets collapsed, safe-haven assets like gold and silver suffered, and cryptocurrencies were decimated. Bitcoin fell over 40% in 24 hours, while the rest of the market tanked by over 70% in many cases, reaching new bear market lows.
On the way down, things quickly got dangerous for Bitcoin, as BitMEX essentially could no longer control its liquidation engine, which caused a cascade effect of longs being squeezed and the price collapsing further.
It wasn’t until BitMEX was taken offline, that prices on spot platform began to rebound. The impact of BitMEX was so apparent at this point, that it left a bad taste in trader’s mouths, and the platform quickly became a ghost town.
It’s even caused a distinct distrust in cryptocurrency exchanges in general, which has prompted more crypto investors to move their BTC off exchanges and into cold storage.
This has resulted in a BitMEX’s open interest – a metric depicting how many open positions are currently on the line and how much BTC and cash equivalent value is wagered – hitting historical lows, according to data from Arcane Research.
Levels fell to the lowest since October 2018, just one month before Bitcoin’s drop to its bear market bottom at $3,200. Worse yet for BitMEX, Arcane’s analysis “reveals a grim reality for the platform”
“Since the all-time high OI of 147,810 BTC, the open interest has now declined by 68.5% to 46,610 BTC,” a weekly report reads.
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BitMEX has earned itself a negative reputation in the past due to order submission errors, a probe from the CFTC, and a public spat with economist Nouriel Roubini. But this may be the last straw for traders, who will be forced to find greener pastures such as PrimeXBT, SimpleFX, FTX, and other popular margin trading platforms suddenly picking up steam as a result of the void left behind by BitMEX.
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