BitMEX Is Closing. Does the Market Care?

A prediction from a trader going by @cryptorover went viral on X, arguing that BitMEX's shutdown could mark the end of the bear market. He compares the BitMEX closure to the collapses of Mt. Gox, FTX, and BitGrail, claiming that Bitcoin entered a bull market after each of those events.

Setting aside whether that interpretation of Mt. Gox, FTX, and BitGrail actually holds up, I want to focus specifically on the closure of BitMEX.

There is no question that the exchange shutting down marks the end of an era. That is not an exaggeration in the slightest.

First, BitMEX is where the perpetual futures boom began. Virtually every exchange that launched perpetual futures trading between 2017 and 2020 and still leads the market today took its cues from BitMEX. Some even copied its model down to the smallest details, with Bybit being a prime example.

Second, BitMEX popularized inverse contracts. I clearly remember how, 10-12 years ago, people who had already concluded that Bitcoin was the most reliable way to preserve their savings, but were not yet ready to stomach BTC's volatility, went looking for a low-cost way to hedge against price declines and ended up on BitMEX.

The exchange offered substantial leverage, meaning users only had to post a small fraction of their bitcoin as collateral to hedge the rest of their holdings. It charged no maker fees and allowed traders to earn funding payments, so they were not just hedging their BTC - they were getting paid to do it.

In other words, today's popular idea of yield-bearing synthetic stablecoins also has its roots in the trading models BitMEX introduced to the market.

But BitMEX made its mark and then faded into the background. Plenty of newer crypto users have never even heard of it. Comparing the impact of its closure to that of FTX or Mt. Gox is frankly absurd.

Symbolically, this is the end of an era. In practical terms, however, BitMEX shutting down today is unlikely to affect anything other than the price of the BMEX token.