Reports show a decrease in the outflow from BitMEX that likely signal an end to the week-long panic from users of the bitcoin exchange. Meanwhile, the Seychelles-based platform is being accused of contributing to the shrinking BTC trading volume following massive liquidation of both short and long positions.
Run on BitMEX Paused
Tweeting on Sunday, July 28, 2019, Twitter user and provider of crypto market data “Skew” revealed a lull in the outflow from BitMEX. The platform’s bitcoin cold storage appears to have seen fewer withdrawals since Saturday (July 27, 2019.)
As previously reported by BTCManager, the U.S. Commodity Futures Trading Commission (CFTC) recently began investigating the exchange over suspicions of servicing American traders.
This investigation purportedly caused a run on the exchange with users seemingly desperate to withdraw their funds. According to Skew, BitMEX had about 197,000 BTC in cold storage before the panic withdrawals began.
In a little under a week, this figure slid 13 percent to 172,000 BTC. As at Sunday, the exchange’s cold reserve was at 174,000 BTC.
BitMEX Liquidation and Bitcoin Market Contractions
Successive long and short liquidations on BitMEX might also be behind the current trading volume contraction in the bitcoin market. There were reports of $89 million in BTC long positions being liquidated on Sunday.
Coincidentally, bitcoin experienced a flash crash that saw the BTC price bottom out a little above $9,100. This plunge was immediately followed by a sudden push to $9,600 only hours later.
Within the same period of the upward push, there was a liquidation of about $30 million in BTC short positions on the exchange. Bear-leaning traders perhaps tried to cash-in on the flash crash by maxing out on short bets but ended up losing heavily in the process.
Crypto Market Needs a Boost
Bitcoin is currently trading within heavily close margins making the daily price action appear reasonably flat. Trading volume is also significantly low across the market.
Later on Monday (July 29, 2019), the New York Supreme Court should deliver its verdict on the case between the New York Office of the Attorney General (NYAG) and the iFinex — the parent company of Bitfinex.
Some commentators say a negative ruling for Bitfinex might be advantageous for bitcoin and the crypto market. Panic selling of Tether (USDT), if the verdict goes against Bitfinex, might boost volumes in the market as traders load up on bitcoin and altcoins.