BitMEX Investigates Bitcoin 'Flash Crash'

Cryptocurrency exchange BitMEX is conducting an investigation into an unusual trading activity that led to a ‘flash crash’ in Bitcoin on its platform. The price of Bitcoin plummeted on BitMEX to $8,900 while it was trading for over $66,000 on other competing crypto exchanges. Following the crash, the price of Bitcoin on BitMEX quickly recovered.

A ‘flash crash’ is a significant price movement that happens in a very short period. It often results from transactions executed close together, which can result in a sharp price drop and recovery within minutes or even seconds.

The Incident and BitMEX’s Response

According to a spokesperson from BitMEX, the Seychelles-based company found evidence of “aggressive selling behavior involving a very small number of accounts”. The spokesperson further stated that the company’s trading systems were functioning normally and all user balances were safe.

On BitMEX’s BTC/USDT spot market, there was a temporary significant drop in the Bitcoin price after an unknown party sold over 400 BTC. This resulted in a sudden flash where the Bitcoin price dropped to about $8,900, a price unseen for a long time. BitMEX initiated an internal investigation into this unexpected event after users reported the sudden price drop.

Investigation and BitMEX’s Reaction

Reports suggest an unidentified entity sold over 400 BTC within a short period. BitMEX confirmed a large sell order took place on the BTC/USDT spot market and is currently investigating internally what exactly happened. However, BitMEX stressed that the prices of their derivative markets and the XBT derivative contracts were not affected by this fluctuation.

Experts report that the unknown party sold about 400 BTC in various batches of 10-50 BTC over a period of two hours. In response to the blocked accounts, BitMEX clarified that not all users were affected, but only a few accounts involved in the investigation. They also confirmed that their trading platform is functioning normally and all funds are safe.

Former CEO’s Remarks

Former BitMEX CEO, Arthur Hayes, had earlier warned that spot Bitcoin exchange-traded funds (ETFs) could completely destroy Bitcoin if they become too successful. According to Hayes, ETF issuers holding all BTC could negatively impact the number of transactions on the Bitcoin network, leading to the shutting down of mining equipment and ultimately, the disappearance of Bitcoin.