BitMEX, the most liquid exchange on the market is being accused of market manipulation (again). Was Arthur Hayes’s exchange the orchestrator of the latest flash crash?
Market Manipulation Behind the Latest Spiral
It’s been a harrowing week for Bitcoin bulls as the markets peaked at over $13000 last Wednesday and have stepped down a little further almost each day since.
In the space of a few days, BTC lost almost $4000 from its value. On Sunday, July 15th, there was a massive sell-off that triggered a flash crash and subsequent huge amount of liquidations on BitMEX–over $164 million worth from traders with long positions. Coincidence? Or is this classic market manipulation at hand?
Flash Crash on Bitstamp
According to certain sources, a whale or group of traders collectively acted to crash the market by putting in a massive sell move of 15,000 ETH on Bitstamp. Chico Crypto states:
“The mass sell-off and resulting liquidations was the work of some market manipulations.”
You may be wondering what this has to do with Bitcoin or BitMEX. Well, it seems, quite a lot. That order plunged the price immediately from $270 to $190 (otherwise knowns as a “flash crash”).
This has everything to do with BitMEX since it pulls its price data for contracts from just three exchanges–Bitstamp, Kraken and Coinbase Pro. All three of which have way lower liquidity than BitMEX.
The ETH dump on Bitstamp represented some $3.5 million of ETH. This made up 15% of its entire trading volume on Sunday–in one trade.
“Like a disease” the flash crash spread to BitMEX ETH futures which bases its contracts’ price 33% on Bitstmap’s price. Contracts were liquidated in the blink of an eye and spread to Bitcoin resulting,