The decline in liquidity caused by the BitMEX exchange is the main reason for the recent bitcoin price collapse (BTC). The conclusion is presented in the analysis performed by the company CryptoQuant.
The expiration of BTC futures contracts on today’s CME platform has led to further downward evolution, temporarily causing Bitcoin to drop to $ 7700.
It all started on September 24, with BitMEX liquidation of contracts worth about $ 700 million.
Bitcoin withdrawals from BitMEX act as key indicators for these mass liquidations and the resulting volatility. As the largest margin trading exchange, BitMEX is known for influencing BTC stock prices.
CryptoQuant has shown that while deposits are available non-stop on the platform, withdrawals only occur once a day at 1pm UTC. Based on on-chain data, when over 5,000 BTC are withdrawn in a single day, market volatility increases exponentially.
Exactly this happened on November 14, 2018, April 19, 2019 and September 25, 2019. On each of these days, price volatility occurred within a short period after the daily withdrawal of BitMEX at 1:00 PM UTC.
On September 24, it was registered that 49141 BTC was withdrawn from the BitMEX wallet. In 5 hours, the BTC price dropped by 8%.
After a day when the price fluctuated around $ 8,300, the close of the settlement deadline for CME futures contracts on September 27 caused another drop to $ 7700.
According to a research report by Arcane Crypto, there is a clear correlation between settlement of futures contracts and the price of Bitcoin. The analyzes show that, as of January 2018, on average, bitcoin decreases by 2.27% as it approaches the expiry date of CME contracts.
When bitcoin performs well, the negative effects of liquidations are more strongly felt. This was demonstrated in May, when the BTC dropped significantly before closing CME contracts.
Currently, Bitcoin is trading at around $ 8,000, and the outlook does not appear to be positive.
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