Bulls Exit BitMEX Bitcoin Futures Market

Since the announcement from U.S. regulators, BitMEX has witnessed an outflow of more than 40,000 bitcoins, currently worth more than $422 million.

Oct 2, 2020 at 6:15 p.m. UTC
Updated Sep 14, 2021 at 10:04 a.m. UTC

Cryptocurrency traders look to be unwinding long positions in bitcoin perpetual futures listed on crypto derivatives exchange BitMEX, which has been charged by regulators with facilitating illegal transactions in the U.S.

  • On Thursday, the U.S. Commodity Futures Trading Commission (CFTC) filed civil charges against the exchange while the Department of Justice (DOJ) filed criminal charges accusing four founders and executives of BitMEX of evading rules designed to stop money laundering.
  • Since the announcements, BitMEX has witnessed an outflow of more than 40,000 bitcoins, currently worth more than $422 million, according to data provided by the blockchain intelligence firm Chainalysis.
  • Open positions in BitMEX futures have declined by more than 22% from $592 million to $460 million since the CFTC and DOJ announcements and are down more than 50% from the high of $1 billion seen on Sept. 1.
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BitMEX perpetuals open interest

  • According to data source Skew, the annualized rolling three-month perpetuals (futures without expiry) basis has declined from 6% to 1.84% in the past 24 hours.
  • Basis refers to the difference between the futures price and the spot price.
  • Essentially, the BitMEX futures premium has declined from 6% to 1.84% in the past 24 hours. In other words, long positions are being squared off.
  • Futures usually trade at a premium to spot prices, and the net buying pressure for futures determines the premium.
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Bitcoin rolling three-month futures basis

  • The differential between the premium offered by other exchanges and BitMEX has widened over the past 24 hours.
  • That indicates increased urgency among traders to move their bullish leveraged positions away from BitMEX, which could be in for a long, drawn-out battle with the U.S. regulators.
  • "BitMEX, with over $70 billion monthly turnovers, has enough resources to keep on fighting with the CFTC and DOJ engaging with the best lawyers in the industry. They have announced their denial of allegations already, and this might turn into a quite long battle," said Alex Melikhov, CEO and founder of Equilibrium and the EOSDT stablecoin.
  • However, BitMEX’s market share has been on the decline.
  • "Open interest is declining since the beginning of September, and the relevance of BitMEX is getting smaller and smaller," Patrick Heusser, senior cryptocurrency trader at Zurich-based Crypto Broker AG, told CoinDesk in a Twitter chat. 

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