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Breaking News: Coinbase Confirms DOJ Investigation Following Major Security Incident

Why BitMEX is Back Under Scrutiny Following Bitcoin’s Rejection at $10.4k

Samuel Wan
Samuel Wan
1 year ago
3 mins read

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Following Bitcoin’s brutal dump at $10.4k, the inquest into what went wrong is taking place now.

Theories regarding whale manipulation consistently make the rounds during such times. But a more tangible explanation alleges that manipulation at derivatives trading platform BitMEX contributed heavily to the losses sustained yesterday.

While the likes of Binance and Huobi bottomed out at around $9.3k, BitMEX, which is currently facing a class-action lawsuit on the grounds of racketeering and fraud, dropped as low as $8.6k.

Bitcoin doing bitcoin things today.

Bitmex low 8600
OKEX low 9300
Huobi low 9350
Coinbase low 9300
Binance low 9400

I did not round those numbers. pic.twitter.com/UIm4lWPBeq

— Alex Krüger (@krugermacro) June 2, 2020

Bitcoin Price Dumps Yet Again

Before yesterday’s dump, crypto markets were expected to see a rally. However, in what should be a familiar situation by now, the price of Bitcoin suddenly took another dive as it approached the $10.4k level.

This saw Bitcoin fall 10% in 15 minutes during the sell-off. Although volatility and Bitcoin are closely associated, many observers are suspicious of the speed at which the dump happened.

Analysis of the Bitcoin price chart shows that the same thing has occurred on two previous occasions. First, in mid-October 2019, where the uptrend touched $10.4k, which was followed by a dump that bottomed out at $6.5k some five weeks later.

The same correction occured in February 2020, where the uptrend reached $10.4k, before crashing to $3.9k in what is now referred to as Black Thursday. This was largely attributed to liquidations as a result of the stock market crashing under pandemic panic.

Bitcoin weekly chart
Bitcoin weekly chart. (Source: tradingview.com)

If history is to repeat, then expectations are that the coming weeks will see a continuation of a further price drop.

BitMEX Under the Spotlight

Technical analysis shows that for over half a year now, $10.4k is a resistance level that sellers have fought hard to keep.

Analysis of yesterday’s move, using smaller time frames, shows the infamous Bart pattern within the charts. Incidentally, this is not a pattern often seen in stocks or FX, it remains relatively exclusive to crypto.

Some say that this alone is evidence of the more candid manipulation that goes on within crypto markets, which is not something that occurs in the highly regulated stock and FX markets.

While it’s a fruitless endeavor to speculate who is manipulating Bitcoin, and for what purpose, an examination of exchange prices during the drop highlights BitMEX as an outlier.

As previously mentioned, the price of Bitcoin fell much more on BitMEX than it did on other exchanges, thus taking out more longs with the move.

Even so, long or short, it doesn’t really matter. As pointed out by @cryptowhale, huge run-ups followed by huge sell-offs, as witnessed over the past few days, add up to sweet profits for the exchanges either way.

https://twitter.com/CryptoWhale/status/1267857707975036929

With that, Dr. Doom Nouriel Roubini once said that “degenerate gamblers” who leverage x100 positions deserve to lose their money.

All the same, yesterday’s “scam wick” on BitMEX has only added fuel to allegations they are making more profit than they are due.

In response to the lawsuit filed against them, BitMEX claimed that the case has no grounding in that the plaintiff has form with targeting crypto companies.

Featured image from Shutterstock
Additional tags: XBTUSD, BTCUSD, BTCUSDT
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Samuel Wan
Samuel Wan

Samuel Wan

Samuel Wan is passionate about different cultures and eating good food. He has years of experience working in business and finance — a burgeoning interest in Bitcoin and cryptocurrencies since 2017. UK based.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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NewsBTC is a cryptocurrency news service that covers bitcoin news today, technical analysis & forecasts for bitcoin price and other altcoins. Here at NewsBTC, we are dedicated to enlightening everyone about bitcoin and other cryptocurrencies.

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