Bitmex Takes Big Hit as Bitcoin Futures Volume Drops

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New data provided by cryptocurrency market aggregator CryptoCompare, as part of its latest monthly Exchange Review, reveals that a January decline in Futures trading saw BitMEX’s daily volumes drop away heavily compared to the speculative instruments in general. 

Futures trading claimed 24% ($54.6 billion) of a cryptocurrency trading sector that receded as a whole during January, experiencing a volume drop of around 16% in a fall back from around $268 billion to $223 billion in combined Spot Trading and Futures trading volumes. December’s figures showed Futures holding an increased 28% share of the total ($76.3), buoyed by the rather more animated price action seen at the end of 2018.

Monthly Spot v Future comparison

BitMEX seeing a decline

Perhaps the most glaring statistic revealed by the 29 pages of research done by the company, however, is the startling decline of Bitcoin-based Futures business going through the books of the Seychelles-based high-leverage marketplace BitMEX. 

Perhaps due to feeling the bite of recent increased pressure from American authorities, and its subsequent moves to stop US-based traders using its services in breach of US regulations, BitMEX’s total volume for XBTUSD Perpetual Swaps (XBT being BitMEX’s ticker code for Bitcoin, the Swaps its daily settled, never-ending Futures instrument) took a fairly hefty 41% turn southwards during January.

Recent reports in the South China Morning Post cited sources describing US-based customers as something like 15% of BitMEX’s user base, and linked the US Securities Exchange Commission’s recent action against 1Broker and warning that any Exchange offering its services to US residents as needing to be registered with heightened moves by the platform to shut down accounts operating in breach of its T&Cs, which outlaw American traders.

While the somewhat becalmed nature of the Bitcoin price, which traded in the mid-$3,000 range for the vast majority of January would also have taken its toll on BitMEX’s volumes, it seems clear that the precipitous nature of the drop is link to the newly found dilligence in blocking trade from North America. Reports have also, for example, noted that Quebec-based customers are now unable to use the site in the wake of new rules coming in to force there. 

Whatever the reason, that large percentage fall took its daily volume back below the $1 billion dollar mark – to $665 million per day, down from $1.13bn in December. It also meant that BitMEX’s share of the total USD-based Bitcoin Futures market fell below 90%, compared to the 95%+ slice it took back in November. 

The US-legal Chicago Mercantile Exchange (CME) Futures stepped in to claim a bigger share of the reduced pie, showing a trend-bucking monthly increase in daily volume from $66.5 million to $79.9 million. That equated to it taking a 10%+ share of the total USD-based Futures market, the first time it has even come close to that kind of number. 

Daily XBT to USD Volumes

The other US-regulated Futures option, offered by The Chicago Board of Exchange (CBoE), fell back from daily volume of $10.65 in December to just $8.1 million in January. In percentage terms, that drop is less than the 29.9% seen by the USD Futures market as a whole over the month, but leaves CBoE with little more than 1% of the entire market.

The two regulated options – which appear to have picked up at least some of the US-based business lost by BitMEX, despite being very different instruments – now account for combined 11.7% share of the dollar-based Bitcoin Futures market, a marked increase – but still trailing well behind the crypto-centric incumbents, BitMEX and the Japan-based BitFlyer. .  

Indeed, the amount of futures trading by BitMEX is now dwarfed by the XBTJPY volume seen on BitFlyer, which – despite the view of the majority of the Western crypto press, that often characterises BitMEX as the major player in terms of  Futures in the sector – has been easily biggest Exchange for such instruments since CryptoCompare has been publishing its figures. After conversion, its daily volumes still exceeded $1bn during January – though they did recede from the 1.4bn range of December to around the $1.1bn mark.  Regulated Exchanges v Crypto Exchanges

The same sources that explained BitMEX’s worries regarding the SEC were keen to point out that Asian traders were still the backbone of its business. However, it appears that the loss of a significant amount of North American trade, coupled with the continued rise in BitFlyer’s popularity in the Far East and the ravages of the extended bull market is taking its toll.  

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