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Ethereum Crashes Again: Is BitMEX Exchange to Blame?

Sep 13, 2018, 9:27AM
1 min, 21 sec READ

Ethereum fell by 8.6% this morning after BitMEX advised investors to short sell. Is BitMEX truly to blame, or are there other factors involved?

BitMEX is in hot water after today's Ethereum crash. The price of ETH fell by 8.6% this morning, coinciding with questionable comments from BitMEX's CEO on Twitter and other forums. The exchange's CEO, Arthur Hayes, implied in early August that customers should short the coin,

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Short selling involves selling an asset in the expectation that the price will go down (and that you will be able to buy it again for cheaper). Perpetual swaps are a tool designed by BitMEX to allow investors to purchase assets with leverage (or borrowed funds). Trustnodes reports that

Bitmex is apparently handling $3 billion in trading volumes for the eth/usd perpetual swap. a number we don’t really believe.

BitMEX has been controversial in the past, with allegations of insider trading, wash trading, and special treatment for preferred investors. However, as some point out, there is "very partial evidence" to support these allegations. It is difficult to thoroughly investigate BitMEX because it is an anonymous exchange and transparency is lacking.

Regardless of BitMEX's integrity, Ethereum has been performing poorly in the past weeks and months, and BitMEX's recent activity cannot be entirely to blame for Ethereum's (perhaps temporary) decline. It seems that individual investors have been short selling on other exchanges such as BitFinex as well.

There are several factors that could have affected Ethereum's recent dip. One could be the negative interpretation of some of Vitalik Buterin's comments during a recent interview with Bloomberg, in which he said that the days of 1,000 times growth in the cryptocurrency industry are over. Another catalyst could have been Ethereum's upcoming hard fork and reduced mining rewards.

Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.