With the insurance fund having lost 0btc from this crash, I feel like I need to post my thoughts about the events of March 13th. The following thread is my opinion on what happened on Bitmex during the crash, an opinion that has been refuted by Bitmex
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Considering they have not released a post-mortem, these conclusions are mine alone.
Bitmex ceased to be a fully functioning exchange for about 18 hours, and got completely fucked for a couple hours at the bottom. Completely disconnected from the rest of the market.
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Bitmex ceased to be a fully functioning exchange for about 18 hours, and got completely fucked for a couple hours at the bottom. Completely disconnected from the rest of the market.
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I believe they were suffering from a "slow" cascading margin call that lasted about 3 hours. One after another after another after another, and the liquidation engine was continuing the dump. When they halting trading, the market bounced 39% in ~25 minutes.
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I believe it is likely that they hit the kill switch on the exchange to act as a circuit breaker to stop the bleeding. They claim it was a hardware issue that caused the downtime. I think it was because their market was out of control. I think they made the right decision.
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There was only 18 million left in the entire orderbook with, (my guess) 200-300m still left in the liquidation engine. With the market evaporating before their (our) eyes, I believe the decision was made to kill the market as a circuit breaker.
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After this, it's my belief that they took over manual control of the liquidation engine in the aftermath to profit more from it. It became very reluctant to sell until the market bounced over 1000 points. I highlighted areas of interest.
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If THIS was the straw that finally broke the camels back after 3 years of fuckery and rejected orders, I'm not sorry. You have nobody to blame but yourself. The writing has been on the wall for years that they have no interest in actually providing a functioning platform.
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Because of this panic, which began from broader economic turmoil in a rush to cash\liquidity, Bitmex got completely overloaded and had to result to measures to save the platform\market. Liquidity in the options market completely evaporated. There were 5% spreads on spot mkts
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This is just one in a long line of days over the last 7 years that were similarly crazy. I'd say this was among the most catastrophic. Read this tweet thread here for some context.
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I do not believe Bitmex caused the dump, I believe (in hindsight) it would have happened anyway. But it seems clear to me that the market ceased to operate rationally below $5000. The liquidation engine was not coded\prepared to handle 80, 90%? of the long-side getting rekt
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Will this raise calls for circuit breakers in crypto? I'm not sure. That almost creates more problems than it solves because of how decentralized and deregulated the industry is. Bitfinex implemented "speed bumps" in Aug 2015 after they had a similar cascading margin call.
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Will this raise calls for posistion limits in crypto? I'm not sure. I think it's unlikely it was one indivigual who was long exposed 200mm and there was no bid to close out their liquidation.
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Will this raise calls about the hiding the true size of the liquidation engine? Arguments could be made about transparency, but arguments could be made about hiding the true size to prevent front-running and incentivize people to close into the liq's. I'm of the latter.
/13
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What is the point of the insurance fund if, after the worst & most violent day ever in crypto, none of it was used?
3/11/2020 - 35,508 XBT
3/14/2020 - 35,210 XBT
(though I will say there was some "USD value" of the fund used, that is pretty minimal)
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3/11/2020 - 35,508 XBT
3/14/2020 - 35,210 XBT
(though I will say there was some "USD value" of the fund used, that is pretty minimal)
/14
And this entire post is written in the silence from Bitmex. There has been no public response to what happened except the (angry?) response I posted above against a very similar accusation to mine from Alameda Research. It's been 36 hours since the event, and yet nothing.
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Finally, I think I should make it clear that these are my opinions, based only on my experience in crypto. And that this is not me ranting because I got rekt by their platform, bitmex got exactly $0 of my money from this move because I don't trade there.
/end
/end
