Trump COVID Test, BitMEX Charges Bring October Shocks for Bitcoin

Bitcoin were apparently withdrawn from BitMEX addresses in a single hour, the cryptocurrency-markets data firm Glassnode tweeted early Friday, citing blockchain data.

BitMEX is a well-known player in the constellation of global cryptocurrency exchanges, partly because it was a pioneer, in 2016, of a new product called the "Perpetual bitcoin leveraged swap." At the time, few traders in nascent digital-asset markets could have anticipated what a major impact the obscure roll-out would have on the industry.

Which made it easy for customers to trade the equivalent of $100 of bitcoin for every $1 down, proved hugely popular and successful among risk-hungry traders, vaulting BitMEX into the top ranks of the world's biggest cryptocurrency exchanges.

The perpetual swaps were infamous for exacerbating price swings: It's a well-known trope among bitcoin traders that every time the market tilts one way or another, BitMEX customers' thinly capitalized positions get liquidated in a series of rapid margin calls, exacerbating price swings that reverberated to other exchanges.

Industry executives were quick to point out that some traders had apparently been shifting their allegiances recently to rival exchanges that had copied BitMEX's "100x" bitcoin derivatives contracts.

"Two years ago, this would have been catastrophic, because BitMEX was such a huge percentage of everybody who's playing leveraged trading," David Weisberger, co-founder and CEO of CoinRoutes Inc., told CoinDesk's Muyao Shen in a phone interview.

"Now, there are quite a few alternatives to BitMEX and several of them have always been more stringent about trading or not allowing U.S. clients to trade on those platforms."

CoinDesk's William Foxley reported that the BitMEX news reverberated in the fast-growing blockchain-based sector of "Decentralized finance," or DeFi, where programmers are developing semi-automated platforms for lending and trading.

Bitcoin has come under pressure in the past 24 hours, seemingly due to the BitMEX controversy and risk-off moves in traditional markets.

On Thursday, the U.S. Commodity Futures Trading Commission and federal prosecutors announced they're charging BitMEX for failing to implement anti-money-laundering procedures and operating an unregistered trading platform.