The volume of open positions on the BitMEX crypto derivatives exchange fell below an annual low amid problems with US regulators.
According to analysts at Arcane Research, in just a few hours, the OI on BitMEX dropped to 61,869 BTC. Approximately the same value was observed in April this year.
The open interest (BTC) on BitMEX’s bitcoin derivatives just hit a yearly low of 61,869 BTC following the announcement of the CFTC charge on the exchange.
The former yearly low was painted on the 30th of April when the open interest bottomed at 61,975 BTC. pic.twitter.com/f5dENV3CQZ
— Arcane Research (@ArcaneResearch) October 1, 2020
On October 1, the US Commodity Futures Trading Commission (CFTC) and the US Department of Justice fileв a lawsuit against BitMEX and its owners, including co-founder and CEO Arthur Hayes. They are accused of running an unregistered trading platform and violating Commission rules, including anti-money laundering and customer identification (KYC) measures.
Shortly after this information, the OI for the XBTUSD perpetual swap fell 11%.
The open interest (BTC) on BitMEX’s bitcoin derivatives just hit a yearly low of 61,869 BTC following the announcement of the CFTC charge on the exchange.
The former yearly low was painted on the 30th of April when the open interest bottomed at 61,975 BTC. pic.twitter.com/f5dENV3CQZ
— Arcane Research (@ArcaneResearch) October 1, 2020
“Traders are definitely closing their positions on BitMEX,” said experts from Arcane Research.
Open interest on BitMEX continued to decline. To date, the depth of the fall of the indicator exceeds 16%.
The dramatic impact of the CFTC announcement becomes clear when zooming in on the hourly open interest data from the XBTUSD perp.
The last hours has seen the OI of the XBTUSD perp (measured in BTC) fall by 11%.
Traders are definitely closing their positions on BitMEX. pic.twitter.com/PeLGIl82JV
— Arcane Research (@ArcaneResearch) October 1, 2020
The number of bitcoins stored on BitMEX addresses has been steadily declining since the market crash in March.
According to Philip Gradwell, chief economist at Chainalysis, two-thirds of this amount went to exchanges, the rest to unidentified wallets. He also notes that last week the total inflow to cryptocurrency platforms amounted to 65 thousand BTC.
24,577 bitcoin has now been withdrawn from BitMEX, 65% to exchanges with the remainder to unhosted wallets. Total inflows to exchanges averaged 65k bitcoin this last week, so BitMEX withdrawals are adding 25% more liquidity already and more will come with the 08:00 UTC withdrawal
— Philip Gradwell (@philip_gradwell) October 2, 2020
Half an hour later, Gradwell announced the withdrawal of another 7,425 BTC from BitMEX, a third of which went to the Gemini bitcoin exchange.
And another 7,425 bitcoin withdrawn from BitMEX, one third to Gemini.
I’m not turning into a full time BitMEX withdraw tweetbot but I’m assuming this is the 08:00 UTC announced withdrawal, although more may come in subsequent blocks
— Philip Gradwell (@philip_gradwell) October 2, 2020
Analyst Alex Kruger believes that in the long term, BitMEX’s troubles will have a positive effect on the US exchanges and OTC trading.
Bitmex news are short term bearish, long term bullish.
Assume the CFTC & DOJ bring Bitmex down. The absence of Bitmex may then result in US exchanges and OTC desks becoming markets of “significant size”, sharply increasing the odds of the SEC approving an ETF.
— Krüger (@krugermacro) October 1, 2020
Krueger does not rule out that this will bring the SEC approval of exchange-traded funds (ETF) based on bitcoin closer.