What Caused BitMEX Mass Crypto Liquidations?

Bitcoin (BTC) held by cryptocurrency exchange BitMEX has dropped 22.5% in recent weeks. BitMEX mass crypto liquidations occurred around mid-March, which caused Bitcoin market crash.

02 April, 2020 | AtoZ Markets – The crypto market suffered one of the hardest hits in its history on the 12th of March. Most cryptocurrencies saw more than 50% of their value cleared. During the crypto bloodbath on the 12th of March, Bitcoin (BTC) fell 50% from a price above $10,400.

Most of Bitcoin’s losses have occurred on BitMEX, one of the largest cryptocurrencies and derivatives exchanges in the world. Massive liquidations on BitMEX played a vital role in the crypto crash. Since then, the amount of Bitcoin held on the platform has decreased significantly.

Bitcoin Positions Were Liquidated On BitMEX

The amount of Bitcoin held by the crypto exchange BitMEX has dropped drastically in the past two weeks, after the exchange experienced a mass liquidation spiral on 13 March. According to CoinMetrics data, BitMEX currently has around 244,000 BTC, which is 22.5% less from its peak of 315,000 BTC on 13 March. Earlier this week, CryptoSlate reported that more bitcoins had been withdrawn than deposit in the past two weeks. According to data from TokenAnalyst, it resulted in a net flow of -67,000 BTC, valued at more than $ 400 million.

The reasons for this plunge are not entirely clear. Investors may simply be withdrawing their crypto to cold storage in the face of an uncertain market. However, BitMEX may have decided to reduce its own exposure to BTC. However, the exits could also mean a lack of confidence in the BitMEX itself – following the crypto bloodbath. The liquidity of the BTC futures market on the exchange has dried up.

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Others suggest that this could simply be the result of the decision of large players and institutional investors to completely exit the market during the current crisis. Rumours about the increase in KYC and AML requirements on BitMEX could have had a negative effect on its traders. Some also argued that BitMEX is losing its dominant position as a margin cryptocurrency exchange, due to the growing propensity to “HODL” Bitcoin.

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