Bitcoin broke out of its week-long consolidation in dramatic fashion, receiving an unexpected boost following the planned shutdown of BitMex, a trading platform with a 40% market share of BTC trading.
Within minutes of the BTC derivatives sale, BitMex went offline for routine maintenance and the price of Bitcoin skyrocketed. Within a 20-minute period, BTC rose over $400. Following this rally, BTC was at a new high since July 24. However, the price gain was short-lived, with the top-ranking cryptocurrency nearly breaking $7,000 before a pullback brought the price back to $6,600.
Immediately, many users and analysts blamed the price surge on planned maintenance of the crypto exchange BitMex. Indeed, the trading stop was announced for only 30 minutes, but in fact the exchange did not work for 2 hours. As BitMex struggled to get back into business, traders could only watch helplessly as their short positions were liquidated. The BitMEX margin trading system allows traders to trade with up to 10x leverage. However, it cannot be stated unequivocally that the liquidation of short positions led to a jump in the rate, since traders were warned in advance.
Perhaps, according to Kruger, bulls, large traders, took advantage of this situation to manipulate the rate. Additionally, oddly enough, incidents like these could be the catalyst for the SEC to deny the ETF on the grounds that Bitcoin is too susceptible to manipulation, reducing the chances of a Bitcoin ETF being approved someday in the foreseeable future to zero.
Bitmex claims it was the victim of a DDoS attack by someone trying to manipulate the market. If this is indeed the case, the attack was certainly successful.
Some immediately accused Bitmex of deliberately keeping its platform offline in order to make a profit. There is no evidence yet to support such a claim, but that hasn't stopped speculation that this was an inside job of the exchange. To vocal critics, this is further evidence of Bitcoin manipulation and another example of why margin trading is dangerous.
Whatever the reason, the coming days promise to be extremely interesting for traders. Over-centralization is a recurring theme in cryptocurrency, and Bitmex, led by the charismatic Arthur Hayes, is a prime example of the dangers of one person influencing the crypto market.
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