BitMEX Sees Massive Bitcoin Outflow
Users of BitMEX seem to be running scared. According to a Bitcoin blockchain analysis by TokenAnalyst, $85 million worth of BTC has left the exchange in the past 24 hours, while a relatively mere $12 million worth of the cryptocurrency came in. This implies a negative $73 million flow.
To put this in perspective, around half of the days that TokenAnalyst posted “24-hour BTC exchange on-chain flows” for BitMEX, the in and outflows were close to equal, much closer than $12 million and $85 million anyway.
That’s not the only worrying sign. Prominent cryptocurrency trader The Boot, who famously turned thousands into millions on the derivatives exchange, remarked that he/she has been observing clearly “so thin” order books. Boot adds that this has only been accentuated by price action on BitMEX, which has been riddled with odd bouts of volatility that were not present prior to the recent outflows.
This isn’t blatant postulation. Crypto markets analysis firm Skew recently noted that no one “is looking at the average bid/offer spread to trade $10 million of BitMEX’s XBT to USD perpetual swap. In other words, the whales seem to be gone.
All this implies that the platform may have lost some market makers and whale traders, some of which may have been based in the United States.
The odd trend that BitMEX’s order book and user base has taken comes, of course, as Bloomberg has released a report claiming that a prominent American regulator is looking into the exchange.
Per previous reports from Ethereum World News, the U.S. Commodity Futures Trading Commission (CFTC) is looking into if BitMEX has been knowingly allowing American users to trade on its platform. This is presumably in response to the exchange’s sudden spike in volume that came alongside this bull market, with it processing over $1 trillion worth of volume in the past year. Both the CFTC and BitMEX were rather quiet on this whole purported situation. A spokesperson of the Bitcoin exchange told Bloomberg:
HDR Global Trading Limited, owner of BitMEX, as a matter of company policy, does not comment on any media reports about inquiries or investigations by government agencies or regulators and we have no comment on this report.
It is important to note that this rumored CFTC investigation may be unfounded. Arthur Hayes, the chief executive of the platform, has explained that it removes anyone found in violation of BitMEX’s terms of services, which includes a clause about the trading of its crypto derivatives in certain regions (including the U.S. and Quebec). Though, users can bypass these IP checks through virtual private networks, which have become somewhat of a given/no-brainer for tech-savvy Bitcoin investors.
Even if this report didn’t result in the direction that BitMEX’s market is taking, crypto investors may still be worried. Over the past few weeks, a number of key figures in American politics and finance, including President Donald Trump and Federal Reserve chairman Jerome Powell, have warned that cryptocurrencies are not in good standing in the eyes of government agencies and financial authorities. This could imply that heavy-handed regulation is on its way.
Photo by Ian Espinosa on Unsplash