The BitMEX futures exchange made headlines again throughout the night. After the exchange had to deal with unexpected downtime, the Bitcoin price dropped to a low of about 3,800 USD. It goes without saying that with such a combination of events, the rumor mill is not long in coming.
According to a tweet from the stock exchange, problems arose during the hectic trading activities on the evening of March 12. It was explained more precisely that between 02:16 and 02:40 UTC on March 13, 2020, a hardware problem occurred at BitMEX’s cloud service provider. As a result, BitMEX requests were delayed. Regular service resumed at 03:00 UTC.
Between 02:16 and 02:40 UTC 13 March 2020 we became aware of a hardware issue with our cloud service provider causing BitMEX requests to be delayed. Normal service resumed at 03:00 UTC. As a reminder, latest system updates can be found on our status page https://t.co/fVa1FAqSEW
— BitMEX (@BitMEXdotcom) March 13, 2020
Is BitMEX behind the rapid Bitcoin price decline?
There were more liquidations on the exchange on the same day than on any other day last year. The total volume of Bitcoin futures also broke all records.
The operator of the Crypto Derivatives Exchange FTX, known under the Twitter handle SBF_Alameda, presented a theory that caused quite a stir. He called it the theory of the day. There he made the accusation that there was never a BitMEX hardware problem.
1) Insane theory of the day: there was no BitMEX hardware issue.
— SBF (@SBF_Alameda) March 13, 2020
According to his theory, the stock market may even have contributed to this record loss. It could have been BitMEX’s unwillingness to respond to market conditions that accelerated the Bitcoin price and its sharp decline. After the platform went offline, the Bitcoin price recovered. According to theory, this was possible because BitMEX made the gigantic sales wall disappear.
In his tweets, SBF went further into the complicated mechanisms of the liquidation machinery of a futures exchange like BitMEX and the possible background of the alleged maintenance work. Another topic was BitMEX’s insurance fund, which had fallen by 1,600 BTC (8.6 million dollars) within 24 hours on Thursday. This seems to be the largest decrease since the beginning of the recording. He thus put forward the theory that BitMEX had to flee the market. At the same time, however, he admitted that this was a wild conspiracy theory.
BitMEX firmly rejects the accusations
BitMEX reacted to this conspiracy theory and pointed out to the author that his assumptions were indeed crazy. Especially since he himself operates a platform in this area with FTX and should, therefore, actually understand what kind of problems can occur on a large scale.
As a result, SBF rowed back and once again publicly emphasized on Twitter that this is really only a conspiracy theory and that he believes BitMEX’s explanations.
Update on this: @BitMEXdotcom says this isn’t what happened, and I believe them.
I also didn’t mean this as a negative thread; one phrasing of it would have been “BitMEX sees a danger in the space and averts it to help save crypto”. Circuit breakers are a complicated thing! https://t.co/1qXjABh0O6
— SBF (@SBF_Alameda) March 13, 2020
Now, of course, the question arises, why would someone throw into the room a conspiracy theory in which he himself does not even believe? Is it a cry for attention? A marketing stunt?
One thing is certain in any case: The markets are going crazy, and no one seems to be able to explain the sharp decline in Bitcoin prices. This is due, for better or worse, to the fact that the general panic in the global financial markets has caused some individual players to simply follow their risk management and liquidate their Bitcoin positions. In contrast, others make irrational decisions based on emotions.